Challenging Fair Value
The recent economic turmoil has created a fairly animated debate about what financial information should be provided to the markets. But regardless of the debate, common wisdom advocates that this information should have at least two components: Relevance and Transparency.
It is difficult to question the desirability of a financial reporting model that generates periodic reports that are transparent and relevant. However both “relevance” and “transparency” are two very general concepts that need to be specified in order to become effective.
[This research paper has been reproduced with permission of the authors, professors of IE Business School, Spain http://www.ie.edu/]