The debate on fair value accounting is still open although the last 20 years have been spent in looking for solutions by academics, practitioners and institutions. After long and continuous discussion both on the basic concepts and the information level contained in fair value measurements and on the different solutions that are possible to adopt in mark to market measurements, IASB and FASB have recently issued new standards on fair value measurements applying some principles not only to financial instruments but also to property and other investments. To verify if the solutions adopted in these Standards really improve the disclosure level and the “usefulness of data for investors”, this paper analyzes the actual level of transparency and the “usefulness” of the “fair value hierarchy” (which from some points of view synthesized the Board’s way of thinking regarding to fair value) which has already been introduced for financial instruments by IFRS 7, Financial Instruments: Disclosure. The paper presents results of an empirical investigation on a sample of domestic and foreign listed banks that adopted fair value hierarchy in line with SFAS 157 and IFRS 7 recommendations. Research questions can be summarized as follows: (i) does fair value hierarchy improve transparency in financial instrument evaluation in bank annual reports, or can it be considered as a tool for earnings management?

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This paper has a double aim, to give a theoretical evaluation of the disclosure model chosen by IASB referring to market risks of financial instruments and to analyze the practical solutions adopted in the case of a sample of listed banks and compliance of the information referring to risk in the "Notes" with the requirements of IFRS 7. In order to investigate the effectiveness of "IFRS 7, Financial Instruments", the research has been conducted considering Annual Report of a sample of 17 banking companies, all listed in the three-year period (2008)(2009)(2010) in Italian financial markets. Studying a three-year period should reveal the performance of IFRS 7 in fostering market discipline by pressing banks to disclose more information regarding risk profile elements, mainly considering market risks such as interest rate risk, currency risk, and price risk, and then making financial disclosure more transparent. A content analysis has been adopted through a cross-sectional and time series study. The results underline that IFRS 7 improves the disclosure of market risks in financial statements compared with previous years even if a better equilibrium between qualitative and quantitative information could be found. In the sample analysed, substantial compliance with IFRS 7 requirements has been found, except for some particularly sensitive information. In some cases quantitative information cannot be considered sufficient to inform on potential impact of changes in risks exposure on the actual and expected value of income and equity of entities.