Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • March 2013
  • Article
  • Harvard Business Review

Why 'Fair Value' Is the Rule: How a Controversial Accounting Approach Gained Support

By: Karthik Ramanna
  • Format:Print
ShareBar

Abstract

For the past two decades, fair-value accounting—the practice of measuring assets and liabilities at estimates of their current values—has been on the ascent. This marks a major departure from the centuries-old tradition of keeping books at historical cost. It also has implications across the world of business, because the accounting basis—whether fair value or historical cost—affects investment choices and management decisions, with consequences for aggregate economic activity. This article discusses the role of investment banking and investment management industry veterans on the Financial Accounting Standards Board in the growth of fair-value accounting. It raises the possibility of special-interest capture of accounting regulation by segments of the financial-services industry.

Keywords

Fair Value; FASB; Finance; Politics; Accounting; Fair Value Accounting; Financial History; Financial Reporting; Accounting Industry; Financial Services Industry; United States

Citation

Ramanna, Karthik. "Why 'Fair Value' Is the Rule: How a Controversial Accounting Approach Gained Support." Harvard Business Review 91, no. 3 (March 2013).
  • Read Now

More from the Author

    • August 2017
    • Journal of Accounting & Economics

    Is the SEC Captured? Evidence from Comment-Letter Reviews

    By: Jonas Heese, Mozaffar Khan and Karthik Ramanna
    • June 2016
    • Faculty Research

    IKEA in Saudi Arabia (A), (B), (C)

    By: Karthik Ramanna
    • March 2016
    • Faculty Research

    The Maggi Noodle Safety Crisis in India (A), (B), and (C)

    By: Karthik Ramanna
More from the Author
  • Is the SEC Captured? Evidence from Comment-Letter Reviews By: Jonas Heese, Mozaffar Khan and Karthik Ramanna
  • IKEA in Saudi Arabia (A), (B), (C) By: Karthik Ramanna
  • The Maggi Noodle Safety Crisis in India (A), (B), and (C) By: Karthik Ramanna
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College