Reliability of Asset Revaluations: The Impact of Appraiser Independence

Reliability of Asset Revaluations: The Impact of Appraiser Independence In this paper we examine whether there are differences in the reliability of asset revaluations made by boards of directors versus independent (external) appraisers. We use a sample of recognized Australian asset revaluations. As a first step we examine the determinants of the choice between director-based revaluations and those undertaken by independent appraisers. We find that independent appraisers are more likely to be used for revaluations of land and buildings and directors are more likely for investments, plant and equipment and identifiable intangibles. We interpret this as evidence of firms harnessing directors' knowledge of asset specificities. We also find that firms with less independent boards are more likely to use independent appraisers. We interpret this as evidence of substitutability between governance mechanisms. Review of Accounting Studies Springer Journals

Reliability of Asset Revaluations: The Impact of Appraiser Independence

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Kluwer Academic Publishers
Copyright © 2002 by Kluwer Academic Publishers
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
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