Type
Article
Titre
Marking to Market versus Taking to Market
Auteur(s)
PLANTIN Guillaume - Département d'économie (Auteur)
TIROLE Jean - Toulouse School of Economics (Auteur)
Éditeur
US : American Economic Association
Volume
108
Numéro
8
Pages
2246 - 2276 p.
ISSN
00028282
DOI
https://doi.org/10.1257/aer.20161749
Mots clés
Cost and market value accounting, Agency, Gains trading, Equilibrium accounting rules
Résumé
EN
Building on the idea that accounting matters for corporate governance, this paper studies the equilibrium interaction between the measurement rules that firms find privately optimal, firms’ governance, and the liquidity in the secondary market for their assets. This equilibrium approach reveals an excessive use of market-value accounting: corporate performance measures rely excessively on the information generated by other firms’ asset sales and insufficiently on the realization of a firm’s own capital gains. This dries up market liquidity and reduces the informativeness of price signals, thereby making it more costly for firms to overcome their agency problems.
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