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Is it fair to blame fair value accounting for the financial crisis?

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When the credit markets seized up in 2008, many heaped blame on mark to market accounting rules, which require banks to write down their troubled assets to the prices they'd fetch if sold on the open market - at the time, next to nothing. Recording those assets below their true value, critics argued, drove financial institutions toward insolvency. Proponents of marking to market, on the other hand, said it exposed executives' bad decisions. If not for this fair value accounting practice, investors would be kept in the dark about the banks' real state of affairs. In this article, Pozen, the chairman of MFS Investment Management, dispels the myths about fair value accounting. For example, it's untrue that most bank assets are marked to market - in 2008 just a third were. Not all write-downs reduce the banks' regulatory capital. Nor is it true that under historical cost accounting, companies don't have to acknowledge changes in market value; they're required to record permanent impairments to assets. After explaining the controversy, Pozen proposes a solution: new, transparent practices that would draw on the best of both historical cost and fair value accounting. If adopted, they could balance the banks' desire to present assets in a good light with investors' need to understand the banks' exposures - and perhaps make everyone happy..Printed journal

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Ketersediaan

Call Number	Location	Available
	PSB lt.dasar - Pascasarjana	1

Penerbit	Harvard Business School.,
Edisi	-
Subjek	Economic crisis Accounting standards Banking industry Fair value Regulation of financial institutions
ISBN/ISSN	178012
Klasifikasi	-
Deskripsi Fisik	-
Info Detail Spesifik	-
Other Version/Related	Tidak tersedia versi lain
Lampiran Berkas	Tidak Ada Data