Business Commons^™

Trust In Fair Value Accounting: Evidence From The Field, Clarence Goh, Chu Yeong Lim, Jeffery Ng, Gary Pan, Kevin Ow Yong

Research Collection School Of Accountancy

We survey stakeholders in the financial reporting process to examine trust in fair value accounting. Although respondents demonstrate high confidence in financial statements, they believe that fair value accounting decreases trust in financial reporting and that preparing fair value numbers is costly but beneficial. They also strongly believe in the Conceptual Framework underlying standard setting. Using multivariate regression analyses, we find that perceiving fair value accounting as beneficial is positively associated with trust in it, consistent with the theory of reasoned action that people engage in behavior (e.g., trust) based on expected positive outcomes of that behavior. We find that …