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Differences In The Reliability Of Fair Value Hierarchy Measurements: A Cross Country Study, Chu Yeong Lim, Tee Yong Jeffrey Ng, Keng Kevin Ow Yong, Gary Pan

Research Collection School Of Accountancy

Prior research suggests that there are significant differences in how investors perceive the reliability of fair values across the fair value hierarchy. An unaddressed question in this stream of research is whether cross-country differences in institutional factors are able to mediate differences in reliability for the fair value hierarchy measurements. Based on an international sample of banks across 20 different countries, we find that the probability of crash risk is lower among countries with better financial development infrastructure, greater level of trust, tighter security regulations and higher level of disclosure requirements. These results apply to Level 1 assets but not …