Basic Research in Fair Value Measurement of Liabilities and Changes in Own Creditworthiness

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The purpose of this study is to investigate issues in fair value accounting by focusing on fair value measurement of liabilities and changes in own creditworthiness. The main results of this study are as follows. (1) It is difficult for the ideal fair value accounting and the accounting treatments proposed by the IASB and the FASB to solve issues in fair value measurement of financial liabilities. (2) The accounting model that focuses on the balance sheet would have negative effects on the valuation role and the contracting role of financial reporting. (3) Fair value accounting would lead banks to alter their behavior and cause procyclicality. These results indicate that stock-based accounting that measures assets and liabilities at fair value impairs the usefulness of accounting information.