TY - JOUR
T1 - The effects of SFAS 157 disclosures on investment decisions
AU - Iselin, Michael
AU - Nicoletti, Allison
PY - 2017/4
Y1 - 2017/4
N2 - This paper examines whether public bank managers change both the composition and classification of their investment portfolios after SFAS 157. We first show that non-agency mortgage-backed securities (MBSNA) are the asset class most likely to be measured using level 3 inputs, which are based on unobservable information. We then find that relative to a control sample of private banks, public banks altered their investment portfolios in a manner that reduced the percentage of MBSNA holdings for which SFAS 157 disclosures are required. Taken together, this evidence is consistent with public banks attempting to avoid disclosure of level 3 assets through changes in both asset composition and classification.
AB - This paper examines whether public bank managers change both the composition and classification of their investment portfolios after SFAS 157. We first show that non-agency mortgage-backed securities (MBSNA) are the asset class most likely to be measured using level 3 inputs, which are based on unobservable information. We then find that relative to a control sample of private banks, public banks altered their investment portfolios in a manner that reduced the percentage of MBSNA holdings for which SFAS 157 disclosures are required. Taken together, this evidence is consistent with public banks attempting to avoid disclosure of level 3 assets through changes in both asset composition and classification.
KW - Banks
KW - Economic consequences of accounting standards
KW - Fair value accounting
KW - SFAS 157
UR - http://www.scopus.com/inward/record.url?scp=85005992267&partnerID=8YFLogxK
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U2 - 10.1016/j.jacceco.2016.09.004
DO - 10.1016/j.jacceco.2016.09.004
M3 - Article
AN - SCOPUS:85005992267
SN - 0165-4101
VL - 63
SP - 404
EP - 427
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 2-3
ER -