WSU accounting professor has work published in Journal of Accounting and Public Policy
Wayne State University Mike Ilitch School of Business accounting professor Sung Gon Chung has had an article accepted for publication by the Journal of Accounting and Public Policy, one of the top journals in the field.
The article, co-authored with Orie Barron of Penn State University and Kevin Ow Yong of Singapore Management University, is titled “The Effect of Statement of Financial Accounting Standards No. 157 Fair Value Measurements on Analysts’ Information Environment.”
It studies how the information environment of the analysts is affected by adopting Fair Value Measurements, No. 157 in the new standard Statement of Financial Accounting Standards.
A full abstract can be found below.
Sung Gon Chung is an assistant professor of accounting in the Mike Ilitch School of Business at Wayne State University. He has also been published in the CPA Journal, another top journal in the field that serves as a resource for practitioners, educators, regulators and other financial professionals.
Abstract
This study examines whether and how the analysts’ information environment is affected by the adoption of the new standard Statement of Financial Accounting Standards No. 157 Fair Value Measurements (hereafter FAS 157). FAS 157 requires firms to disclose their fair value assets and liabilities into Level 1 measurements (traded in active market), Level 2 measurements (not traded in active markets, but inputs are adjusted for similar items traded in active markets), and Level 3 measurements (inputs are unobservable and generated by the entity) as well as to provide additional information regarding these measurement inputs and valuation techniques. We show that expanded disclosure requirements in compliance with FAS 157 lead to reduced analyst uncertainty and information asymmetry among analysts. These benefits to analysts extend to firms with Level 3 assets in reducing information uncertainty but not information asymmetry. Further analysis reveal that investors react more strongly to analysts’ recommendations issued right after the filing dates in the post-FAS 157 period than before, indicating that these recommendations are more informative. Overall, our findings suggest that additional fair value disclosures as a result of FAS 157 improve the analysts’ information environment.
