Amendment of IAS 39 by the IASB in 2008 provided an option to reclassify investments from fair value to historical cost. Whereas this option was available to all firms, it was particularly relevant to banks. We predict that “too important to fail” (TITF) banks took less advantage of this...

We examine whether the use of fair value measurement (FVM) for bank assets reduces information asymmetry among equity investors (bid–ask spread) and how this is affected by the recognition of own credit risk gains and losses (OCR). Our findings show that FVM of assets is associated with...

I identify issues that bank regulators need to consider if fair value accounting is used for determining bank regulatory capital and when making regulatory decisions. In financial reporting, US and international accounting standard setters have issued several disclosure and measurement and...

We scrutinize the role financial reporting for fair values, asset securitizations, derivatives, and loan loss provisioning played in the Financial Crisis. Because banks were at the center of the Financial Crisis, we focus our discussion and analysis on the effects of financial reporting by...

Our analytical description of how banks' responses to asset price changes can result in procyclical leverage reveals that for banks with a binding regulatory leverage constraint, absent differences in regulatory risk weights across assets, procyclical leverage does not occur. For banks without a...