Reliability of Level Three Valuations and Credit Crisis Cover Image

Reliability of Level Three Valuations and Credit Crisis
Reliability of Level Three Valuations and Credit Crisis

Author(s): Arbër H. Hoti, Visar Peci, Adrian Alo
Subject(s): Economy
Published by: Editura Universitară Danubius
Keywords: Level three valuations; mark-to-model; FAS 157; financial reporting; disclosures;

Summary/Abstract: This research paper evaluates the impact of level three valuations in accordance with FAS 157 and its impact on investors, auditors’ work, and valuation. The objective of this research is to demonstrate that the fair value measurements should not be suspended. The standards provide for measurement of fair value in all market conditions. Therefore, level 3 measurements or mark-to model is an answer for many issuers that are not sure how to measure their assets and liabilities at the fair value. The paper concludes that fair value measurement has not caused the current crisis and has no pro-cyclical effect and suggests several recommendations for policy makers and regulators.

  • Issue Year: 8/2012
  • Issue No: 1
  • Page Range: 5-13
  • Page Count: 9
  • Language: English