Fair Value Accounting and Regulatory Capital Requirements

Yonetani, Tatsuya; Katsuo, Yuko

doi:10.2139/ssrn.1028734

Cited by 5 publications

(8 citation statements)

References 2 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Dentro de esta línea han sido desarrollados varios estudios, entre los cuales se destacan el de Barth, Landsman y Wahlen (1995), en el que se concluyó que los bancos de Estados Unidos que aplicaron el criterio contable del valor razonable presentaban resultados más volátiles que aquellos que utilizaban el criterio de coste histórico y dejan de cumplir con más frecuencia las exigencias del capital mínimo regulador. En la misma línea, Yonetani y Katsuo (1998), analizando los efectos de la contabilización a valor razonable en los bancos Japoneses, confi rmaron que la volatilidad de los resultados bajo ese nuevo criterio es expresivamente superior que a los resultados de acuerdo al coste histórico.…”

Section: Antecedentesunclassified

Impacto de la aplicación del fair value en la volatilidad de la banca Brasileña: un estudio empírico

Monteiro¹,

Guevara-Grateron

2006

Rev. contab. finanç.

View full text Add to dashboard Cite

En este paper es analizado el impacto que ha tenido la adopción del valor razonable sobre la volatilidad de los resultados y fondos propios en los bancos de Brasil. La muestra estuvo constituida por 73 bancos que representaban, a Junio del 2002, el 95,93% del total de activos del sistema nacional. Se realizo un análisis comparativo entre las volatilidades, con y sin los efectos de la nueva regulación, e se indago para conocer si existe algún síntoma de utilización de prácticas para el alisamiento de los beneficios, relacionadas con las partidas de ajustes a valor razonable. Los resultados de esta investigación revelan que, al contrario de lo que se espera, el nuevo criterio en cuestión no ha incrementado las volatilidades y, por otro lado, han puesto en manifiesto síntomas de alisamiento de beneficios.
In this paper, we analyze the impact of the adoption of fair value on the volatility of the results and reserves of Brazilian banks. The sample consisted of 73 banks, which represented, in June 2002, 95.93% of total assets in the national system. We conducted a comparative analysis between the volatilities, with and without the effects of the new regulation, and investigated if there is some symptom of utilization of practices for smoothing the benefits, related to the items of adjustments to fair value. The results of our research revealed that, as opposed to expectations, the new criterion in question has not increased volatility but, on the opposite, has exhibited symptoms of smoothing of benefits

show abstract

Section: Antecedentesunclassified

Impacto de la aplicación del fair value en la volatilidad de la banca Brasileña: un estudio empírico

Monteiro¹,

Guevara-Grateron

2006

Rev. contab. finanç.

View full text Add to dashboard Cite

show abstract

“…There is a semi-consensus within the research community that fair value-based earnings are more volatile than those based on historical cost (e.g. Barth et al, 1995;Yonetani and Katsuo, 1998;Turel, 2007;Al-Khadash and Abdullatif, 2008). Kölschbach (2001) claims that recognition of fair value changes in profit-and-loss accounts and immediate recognition of profits when contracts are entered into would put insurance enterprises at a disadvantage with respect to non-insurance enterprises in the capital markets.…”

Section: Variable Descriptions and Hypotheses Of The Studymentioning

confidence: 99%

Risk relevance of fair value income measures under IAS 39 and IAS 40

Al‐Yaseen¹,

Al-Khadash

2011

Journal of Accounting in Emerging Economies

View full text Add to dashboard Cite

Purpose -This paper seeks to examine the risk relevance of fair value income measures under IAS 39 and IAS 40. Design/methodology/approach -The study sample comprises Jordanian insurance companies. Data were collected from two main sources: Jordanian insurance companies' annual reports, and the official website of the Amman Stock Exchange. The study begins by investigating the volatility of four income measures, calculated by including and excluding holding gains or losses of financial instruments and property investments. Then it examines the association between its four income volatility measures and one stock market-based risk factor, in order to provide evidence on the risk-related information content of each income volatility measure. Findings -Income based on fair values reflects income volatility more than historical cost-based income. It is also found that income is (not) more volatile with the recognition of unrealized fair value gains/losses on financial instruments (investment property). Results of assessing the relative explanatory power of income volatility measures suggest that not all fair value income volatility measures can be a good proxy of the total risk. On the contrary, none of our income volatility measures provides significant incremental risk-relevant information for total risk. Originality/value -Most prior studies have focused on the value relevance of fair value accounting in Western developed countries, and mainly in the banking sector. This study makes a significant contribution to existing knowledge via exploring the applications of fair value accounting by insurance companies and investigating the implications of mark-to-market on risk, instead of share price, in an emerging country -Jordan. The findings of this study are useful to researchers and capital-market participants interested in explaining accounting and market risk measures.

show abstract

“…With the introduction of FAS 107, there has been a significant volume of accounting research that has concentrated on the value-relevance 8 aspect of banks' fair value disclosures. Focusing on financial institutions and particularly the banking industry, these studies investigated major classes of financial instruments, including investment securities, loans and debts (see Barth, 1994;Barth et al, 1995;Barth et al, 1996;Eccher et al, 1996;Yonetani and Katsuo, 1998). They found significant positive correlations between fair value disclosures and market-based measures such as share prices.…”

Section: Research Questionsmentioning

confidence: 99%

The Issue of Transparency in the Financial Statements of Commercial Banks: Empirical Evidence after the Global Financial Crisis

Bui

2011

AJFA

View full text Add to dashboard Cite

<p>The debate on the applicability of Fair Value Accounting has resurfaced after the Global Financial Crisis. This study contributes to this debate by empirically comparing the effects when the fair value changes of financial instruments disclosed in the notes are considered in the primary financial statements. The study’s sample is four major Australian banks and four of the largest American banks and covers the period from 2005 to 2010. The results show that Comprehensive Income of the sample banks is extremely negatively affected by fair value changes. Shareholders’ Equity is also negatively affected, although the effects are not material. These findings indicate that, from a market value perspective, the underlying performance and risks of commercial banks are not properly reflected in the financial statements. By contrast, as a consequence of high holdings of regulatory capital, fair value changes do not trigger violations of Tier 1 Capital Ratio and Total Capital Ratio. Similar results are found for American banks when capital injections from the Troubled Assets Relief Programme are excluded.</p>

show abstract

Fair Value Accounting and Regulatory Capital Requirements

Cited by 5 publications

References 2 publications

Impacto de la aplicación del fair value en la volatilidad de la banca Brasileña: un estudio empírico

Impacto de la aplicación del fair value en la volatilidad de la banca Brasileña: un estudio empírico

Risk relevance of fair value income measures under IAS 39 and IAS 40

The Issue of Transparency in the Financial Statements of Commercial Banks: Empirical Evidence after the Global Financial Crisis

Contact Info

Product

Resources

About