Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 21, 2023 erstellt
Description:
A primary argument against fair values is the lack of verifiability, where verifiability is defined as consensus in measurement by independent parties. Changes in data transparency, pricing sources, and oversight mechanisms potentially affect consensus in the reporting of investment fair values over time. In this study, we investigate trends in fair value consensus of investment securities. Using an insurance dataset that provides fair values of identical securities across all holders, we find that the fair value range, standard deviation, and difference from the mode exhibit declining trends. These trends are stronger in settings where management has greater opportunity or incentive to record a biased estimate. Additional tests reveal corresponding increases in value relevance, suggesting that the market perceives higher quality estimates over time. While conventional arguments express concern over management’s ability to manipulate fair values, our results demonstrate patterns consistent with improved verifiability without sacrificing relevance