Impact of factors on fair value accounting: empirical study in Vietnam
-
DOIhttp://dx.doi.org/10.21511/imfi.17(3).2020.02
-
Article InfoVolume 17 2020, Issue #3, pp. 10-26
- Cited by
- 1417 Views
-
1278 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Due to the ongoing process of globalization, enterprises need to provide financial statements in accordance with international practices, in which information about assets and liabilities should be presented at fair values rather than at original prices. Fair value is supported by the International Accounting Standards Board and the Financial Accounting Standards Board. The purpose of this study is to evaluate the adoption of fair value accounting in Vietnam and the impact of factors on the adoption of fair value. The paper used the analytical framework of previous studies to identify factors affecting the adoption of fair value. Additionally, this study applied quantitative research methods and collected data by sending questionnaires to 127 accountants and directors of listed companies. Particularly, binary logistic regression was conducted to investigate the extent of the impact of each factor on the adoption of fair value. The results have shown that human resources have the strongest and positive impact on the adoption of fair value, and this is followed by the benefits of fair value. Difficulties and markets negatively affect the use of fair value. Furthermore, the control variables that affect the use of fair value are sector, size and length of operation with different levels of impact. The accuracy rate of the overall predictive model is 85.8%. The findings provide guidance of the application of fair value accounting in companies and give recommendations to policy makers in establishing a legal accounting framework in Vietnam.
- Keywords
-
JEL Classification (Paper profile tab)G32, G41
-
References29
-
Tables13
-
Figures1
-
- Figure 1. Conceptual framework
-
- Table 1. Group statistics
- Table 2. Independent sample test
- Table 3. Test of homogeneity of variances
- Table 4. KMO and Bartlett’s Test
- Table 5. Total variance explained
- Table 6. Rotated component matrix
- Table 7. Omnibus tests of model coefficients
- Table 8. Classification table
- Table 9. Variables in the equation
- Table A1. Measurement scales
- Table A2. Descriptive statistics
- Table A3. Item-total statistics
- Table A4. Correlations
-
- Aboody, D. E., Barth, M. E., & Kasznik, R. (1999). Revaluations of fixed assets and future firm performance: Evidence from the UK. Journal of Accounting and Economics, 26, 149-178.
- Barlev, B., & Haddad, J. R. (2003). FVA and the management of the firm. Critical Perspectives on Accounting, 14(4), 383-415.
- Barlev, B., & Haddad, J. R. (2007). Harmonization, comparability, and FVA. Journal of Accounting, Auditing and Finance, 22(3), 493-509.
- Barth, M. E., & Clinch, G. (1998). Revalued Financial, Tangible, and Intangible Assets: Associations with Share Prices and Non-Market-Based Value Estimates. Journal of Accounting Research, 36, 199-233.
- Benjamin, S. J., Niskkalan, A., & Marathamuthu, M. S. (2012). FVA and the Global Financial Crisis: The Malaysian Experience. JAMAR, 10(1), 53-58.
- Bewley, K., Graham, C., & Peng, S. (2018). The winding road to FVA in China: a social movement analysis. Accounting, Auditing & Accountability Journal, 31(4), 1257-1285.
- Brown, P., Izan, H. Y., & Loh, A. L. (1992). Fixed Asset Revaluations and Managerial Incentives. A Journal of Accounting, Finance and Business Studies, 28(1), 36-57.
- Cairns, D., Massoudi, D., Taplin, R., & Tarca, A. (2011). IFRS Fair Value measurement and accounting policy choice in the United Kingdom and Australia. The British Accounting Review, 43(1), 1-21.
- Chen, X., Hellmann, A., & Mithani, S. R. (2019). The Effect of Fair Value Adjustments on Dividend Policy Under Mandatory International Financial Reporting Standards Adoption: Australian Evidence. A Journal of Accounting, Finance and Business Studies.
- Christensen, H. B., & Nikolaev, V. V. (2013). Does FVA for non-financial assets pass the market test? Review of Accounting Studies, 18, 734-775.
- Danbolt, J., & Rees, W. (2008). An Experiment in FVA: UK Investment Vehicles. European Accounting Review, 17(2), 271-303.
- Dumitru, M., Maria, I. D., & Carmen, G. B. (2013). Fair Value measurement disclosures: particularities in the context of listed companies and European funding. Annales Universitatis Apulensis Series Oeconomica, 15(1), 40-53.
- Fargher, N. (2001). Management perceptions of FVA for all financial instruments. Australian Accounting Review, 11, 62-72.
- Ghosh, C., Liang, M., & Petrova, M. (2020). The Effect of Fair Value Method Adoption: Evidence from Real Estate Firms in the EU. The Journal of Real Estate Finance and Economics, 60, 205-237.
- Hanley, K. W., Jagolinzer, A. D., & Nikolova, S. (2018). Strategic estimation of asset fair values. Journal of Accounting and Economics, 66(1), 25-45.
- Hsu, A. W., & Wu, G. S. H. (2019). The fair value of investment property and stock price crash risk. Asia-Pacific Journal of Accounting & Economics, 26, 38-63.
- Ijeoma, N. B. (2014). The contribution of FVA on corporate financial reporting in Nigeria. American Journal of Business, Economics and Management, 2(1), 1-8.
- Jung, B., Pourjalali, H., Wen, E., & Daniel, S. J. (2013). The association between firm characteristics and CFO’s opinions on the fair value option for non-financial assets. Advances in Accounting, incorporating Advances in International Accounting, 29, 255-266.
- Kumarasiri, J., & Fisher, R. (2011). Auditors’ Perceptions of Fair-Value Accounting: Developing Country Evidence. International Journal of Auditing, 15, 66-87.
- Laux, C., & Leuz, C. (2010). Did Fair – Value Accounting Contribute to the Financial Crisis? Journal of Economic Perspectives, 24(1), 93-118.
- Rajni, D., Joycelyn, D., Rashika, K., & Charlotte, T. (2012). Accountant and user perceptions of FVA: Evidence from Fiji. Global Journal of Business Research, 6(3), 93-102.
- Richard, J. (2004). The secret past of Fair Value: Lessons from history applied to the French case. Accounting in Europe, 1, 95-107.
- Robinson, D., Smith, T., & Valencia, A. (2018). Does managerial opportunism explain the differential pricing of level 3 fair value estimates? Journal of Financial Research, 41(2), 253-289.
- Sangchan, P., Habib, A., Jiang, H., & Bhuiyan, M. B. U. (2020). Fair Value Exposure, Changes in Fair Value and Audit Fees: Evidence from the Australian Real Estate Industry. Australian Accounting Review, 32.
- Songlan, P., Cameron, G., & Kathryn, B. (2014). FVA Reforms in China: Towards an Accounting Movement Theory.
- Sundgren, S., Mäki, J., & Somoza-López, A. (2018). Analyst Coverage, Market Liquidity and Disclosure Quality: A Study of Fair-value Disclosures by European Real Estate Companies Under IAS 40 and IFRS 13. The International Journal of Accounting, 53(1), 54-75.
- Ting, Y. S., & Soo, C. M. (2005). FVA – Relevance, Reliability and Progress in Malaysia. University College Sedaya International.
- Vergauwe, S., & Gaeremynck, A. (2019). Do measurement-related fair value disclosures affect information asymmetry? Accounting and Business Research, 49(1), 68-94.
- Yichao, L. (2010). The Stydy of the Application Status of FVA in China. International Journal of Business and Management, 5(9), 155-158.