Discussion of “The financial reporting of fair value based on managerial inputs versus market inputs: evidence from mortgage servicing rights”

Discussion of “The financial reporting of fair value based on managerial inputs versus market... Contrary to the guidance provided by regulators and industry associations suggesting that mortgage servicing rights (MSRs) be recorded as Level 3 assets, Altamuro and Zhang identify that 25 % of banks classify them as Level 2 assets. This variation in the asset classification of a single asset type provides a unique setting to examine the role of inputs in the fair value measurement process. Altamuro and Zhang find that the fair value of MSRs based on managerial inputs (Level 3) better reflects the economics of the underlying assets than the fair value of MSRs based on market inputs (Level 2). This discussion examines the institutional features of the MSR market, particularly the market concentration and the illiquidity of the market, that are important when considering this result. The discussion also raises a number of questions about the inputs used in the fair value process and calls for further research on this topic. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Discussion of “The financial reporting of fair value based on managerial inputs versus market inputs: evidence from mortgage servicing rights”

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Publisher
Springer US
Copyright
Copyright © 2013 by Springer Science+Business Media New York
Subject
Economics / Management Science; Accounting/Auditing; Finance/Investment/Banking; Public Finance & Economics
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1007/s11142-013-9242-y
Publisher site
See Article on Publisher Site

References

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