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IFRS fair value measurement and accounting policy choice in the United Kingdom and Australia

Cairns, David, Massoudi, Dianne, Taplin, Ross H. and Tarca, Ann (2011) IFRS fair value measurement and accounting policy choice in the United Kingdom and Australia. British Accounting Review, 43 (1). pp. 1-21. ISSN 0890-8389

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Abstract

This study investigates the use of fair value measurement by 228 listed companies in the UK and Australia around the time of adoption of IFRS from 1 January 2005. We test whether within and between country comparability in policy choices (as measured by T indices) has changed in relation to (a) mandatory and (b) optional use of fair value measurement. Mandatory requirements related to financial instruments (IAS 39) and share-based payments (IFRS 2) have increased comparability, with a weaker effect for biological assets (IAS 41). In relation to the optional use of fair value, comparability increased in relation to property (IAS 16) because some companies discontinued fair value measurement. Under IAS 39, the fair value option for other financial assets and other financial liabilities decreased comparability. Options to use fair value in other areas (intangible assets, plant and equipment and investment properties) are not generally taken up, either for on-going measurement or on IFRS adoption (under the 'deemed cost' option). The results suggest a conservative approach and/or lack of incentives to use fair value measurement for most companies. Exceptions include some banks and insurance companies (for other financial assets and liabilities) and companies holding investment properties.

Item Type: Article
Official URL: http://www.elsevier.com/wps/find/journaldescriptio...
Additional Information: © 2011 Elsevier Ltd
Library of Congress subject classification: H Social Sciences > HF Commerce > HF5601 Accounting
Sets: Departments > Accounting
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 21 Apr 2011 09:15
URL: http://eprints.lse.ac.uk/35496/

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