Rational thoughts of fair value and governance research in accounting

Abstract

The great challenge of financial crisis triggered thinking in the accounting profession. Fair value accounting is not a thermometer; or just an inaccurate thermometer. As the bias between theoretical concepts and application environment, fair value is not always fair; firms reporting unrealized losses and gains under fair value accounting may strengthen the economic pro-cyclical effect. So it is not strange that Fair Value Accounting is regarded as the Wrong Scapegoat for financial Crisis. Owing to providing more useful information to investors than the alternatives, fair value accounting can't be repealed and will be continuously improved in the future both conceptual and practical. Effective method to improve Fair value accounting is to maintain the joint development of accounting and financial innovation, including the improvement of standards and reporting System, strengthening supervision and extensive disclosure. © 2011 Springer-Verlag Berlin Heidelberg.