Footnote:
In: Journal of Financial Research, Vol. 41, No. 2, 2018
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 17, 2017 erstellt
Description:
Using hand collected Level 3 data, we find that banks near key capital ratios report higher unrealized gains in Level 3 assets, consistent with managers using unrealized gains in earnings from Level 3 valuations to boost capital ratios. Additionally, we document an incremental pricing discount for Level 3 assets among these firms, suggesting that the pricing discount observed by prior research may not be entirely due to measurement error inherent in Level 3. Further, we observe that this opportunistic behavior diminishes under the new FASB disclosure regime, suggesting that the expanded disclosures may increase the value relevance and reliability of fair value measurements