This paper examines equity market perceptions of fair value reporting for tangible assets. We identify six events—four designated as increasing, two as decreasing—affecting the likelihood of US adoption of fair value reporting for investment property (i.e., real estate) assets, one of the largest asset classes in the world. Fair value adoption in the US would facilitate convergence of one of the widest remaining disparities between US reporting and IFRS: accounting for tangible investment property assets, where the US (IFRS) requires depreciated historical cost (recognized or disclosed fair values). Using a sample of US investment property firms, we document an on average positive market reaction for movement towards fair value reporting. We further find predictable cross-sectional variation, with the market reaction increasing for firms with greater commitment to high quality reporting, greater investor demand for fair values, higher financial risk, and staler asset values.
Professor Riedl isthe John F. Smith Professor of Management, Professor of Accounting, and Chair of the Accounting Department in the Questrom School of Business. He joined Boston University in 2011; he was previously at the Harvard Business School from 2002-2011. Prior to entering academia, he worked at a Big 6 auditor, in internal audit at a Fortune 250 oil company, and in corporate reporting at a real estate brokerage house. During his career, he attained the professional designations of CPA, CMA, and CIA.
His research focuses on three mega-trends within financial reporting today: fair value accounting, international reporting, and expanding the reporting model (including ESG – environmental, social, and governance – reporting). He has published in the top-tier accounting (The Accounting Review, Journal of Accounting Research, Review of Accounting Studies, Contemporary Accounting Research) and management journals (Management Science), with over 85 presentations at major universities around the world. His work has received over 4,000 citations, and has been recognized with various awards including the Competitive Manuscript Award (given for the top accounting dissertation). He has served on a number of doctoral committees at both HBS and BU, and published extensively with doctoral students and junior accounting faculty. He is currently the only accounting academic serving as an editor for two of the top five accounting research journals (both The Accounting Review and Contemporary Accounting Research).
Eddie teaches classes at the undergraduate, MBA, executive, and doctoral levels. Both of his undergraduate and graduate “Financial Statement Analysis” courses have consistently ranked among the three highest-rated courses at BU’s Questrom School of Business. He has taught executive programs for a number of Fortune 500 firms, including BP, Ericsson, IBM, and TE Connectivity. His case studies have sold over 100,000 copies to date, with a focus on financial reporting and valuation topics in the real estate, financial services, agriculture, chemical, restaurant, and incarceration industries.