In Defense of Fair Value: Weighing the Evidence on Earnings Management and Asset Securitizations
Date of this Version
Journal of Accounting and Economics
Dechow, Myers, and Shakespeare (DMS, 2009) find a negative relation between income from securitization activities and income from non-securitization activities. DMS interprets this finding as indicating that managers use the flexibility available in fair value accounting rules to smooth earnings. We clarify the role of fair value in accounting for asset securitizations, discuss alternative explanations for the evidence presented in DMS, and offer suggestions for future research. We caution against inferring the desirability of any particular accounting method from earnings management research.
© 2010. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.
asset securitizations, securitization income, earnings management, fair value
Barth, M., & Taylor, D. J. (2010). In Defense of Fair Value: Weighing the Evidence on Earnings Management and Asset Securitizations. Journal of Accounting and Economics, 49 (1-2), 26-33. http://dx.doi.org/10.1016/j.jacceco.2009.10.001
Date Posted: 27 November 2017
This document has been peer reviewed.
At the time of publication, author Daniel Taylor was affiliated with Stanford University. Currently (October, 2016), he is a faculty member at the Accounting Department at the University of Pennsylvania.