Delayed Updating of Fair Values : Lack of Information or Intentional Delays?

Using a sample of illiquid assets we provide evidence of the delay of updating fair values of individual assets reported in financial statements (delayed updating). Although we find that some delayed updating is due to a lack of information, we find more evidence consistent with intentional delays, including when incentives and ability to delay are higher, and when delaying bad news. We also find that delayed updating is mitigated with stronger monitoring and governance. Finally, we reconcile our asset-level evidence to prior portfolio-level findings and find that firms with more asset-level delayed updating have higher portfolio serial correlation and lower value relevance