TY - JOUR
T1 - The reliability of investment property fair value estimates
AU - Richard Dietrich, J.
AU - Harris, Mary S.
AU - Muller, Karl A.
PY - 2000/10
Y1 - 2000/10
N2 - We investigate the reliability of mandatory annual fair value estimates for UK investment property. We find that appraisal estimates understate actual selling prices and are considerably less biased and more accurate measures of selling price than respective historical costs. Investigations of managerial discretion over fair value reporting reveal that managers select among permissible accounting methods to report higher earnings, time asset sales to smooth reported earnings changes, smooth reported net asset changes and boost fair values prior to raising new debt. Finally, we find that the reliability of appraisal estimates increases when monitored by external appraisers and Big 6 auditors.
AB - We investigate the reliability of mandatory annual fair value estimates for UK investment property. We find that appraisal estimates understate actual selling prices and are considerably less biased and more accurate measures of selling price than respective historical costs. Investigations of managerial discretion over fair value reporting reveal that managers select among permissible accounting methods to report higher earnings, time asset sales to smooth reported earnings changes, smooth reported net asset changes and boost fair values prior to raising new debt. Finally, we find that the reliability of appraisal estimates increases when monitored by external appraisers and Big 6 auditors.
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U2 - 10.1016/S0165-4101(01)00002-7
DO - 10.1016/S0165-4101(01)00002-7
M3 - Article
AN - SCOPUS:0013402042
SN - 0165-4101
VL - 30
SP - 125
EP - 158
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 2
ER -