Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 18, 2022 erstellt
Description:
The Financial Accounting Standards Board (FASB) recently replaced the “incurred loss” (IL) model of reporting credit losses with the “current expected credit loss” (CECL) model to improve the timeliness of credit loss information for financial statement users. CECL requires entities to recognize estimated lifetime credit losses upon loan origination, which is timelier than the IL model but potentially less accurate. We examine whether newly recognized credit losses under CECL (i.e., the CECL day-1 impact) are decision-useful for equity investors. We find that CECL day-1 impacts improve the value relevance of credit loss allowances and their predictive ability for future credit losses, and overall, that CECL allowances have greater value relevance and predictive ability than IL allowances. Furthermore, CECL day-1 impacts provide new information to investors, rather than only confirming expectations, which reduced investor uncertainty during the onset of the COVID-19 crisis