Record Details

Pricing of fair value instruments reported under International Financial Reporting Standards 7: South African setting

HTS Teologiese Studies/Theological Studies


 
 
Field Value
 
Title Pricing of fair value instruments reported under International Financial Reporting Standards 7: South African setting
 
Creator Hlatshwayo, Hopewell Zulu, Mbalenhle
 
Subject — fair value levels; IFRS 7; Johannesburg Stock Exchange (JSE); fair value hierarchy; IFRS 13
Description Background: Prior literature established that different fair value levels disclosed in terms of the International Financial Reporting Standards (IFRS) 7 are value relevant.Setting: This study investigates the market pricing of the different fair value levels, as well as the market reaction towards the fair value hierarchy levels reported in terms of IFRS 7.Aim: Prior research found inconsistencies in the market pricing of fair value levels. This study seeks to contribute to this debate. It also focuses on the period after comprehensive guidance on how to measure fair value levels was issued.Methods: Data from 2009 to 2015 were collected from the financial sector companies listed on the Johannesburg Stock Exchange. The study uses the statement of financial position and the Ohlson model to investigate the market pricing of the different fair value levels disclosed in terms of IFRS 7.Results: The results of the study show that the fair value of assets level 1, 2 and 3, as well as the fair value of liabilities level 3 are value relevant while the fair value of liabilities level 1 and 2 are not value relevant. Furthermore, the market pricing of level 2 and 3 fair value assets and liabilities is not lower for companies with a high debt equity ratio than for companies with a low debt equity ratio. The results further reveal that the pricing of level 3 assets improved with the introduction of IFRS 13 and post the 2008 financial crisis.Conclusion: Fair value assets across different hierarchy levels are value relevant. On the contrary, fair value liabilities are priced differently across the different hierarchy levels.
 
Publisher AOSIS Publishing
 
Contributor
Date 2019-01-15
 
Type info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion — Quantitative research
Format text/html application/epub+zip application/xml application/pdf
Identifier 10.4102/sajems.v22i1.2345
 
Source South African Journal of Economic and Management Sciences; Vol 22, No 1 (2019); 9 pages 2222-3436 1015-8812
 
Language eng
 
Relation https://sajems.org/index.php/sajems/article/view/2345/1688 https://sajems.org/index.php/sajems/article/view/2345/1687 https://sajems.org/index.php/sajems/article/view/2345/1689 https://sajems.org/index.php/sajems/article/view/2345/1685
 
Coverage South Africa 2009 - 2015 —
Rights Copyright (c) 2019 Mbalenhle Zulu, Hopewell Hlatshwayo https://creativecommons.org/licenses/by/4.0