Financial crises : is the principle of fair value fair ?

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Nicolas VÉRON

Economist, Bruegel think-tank


Former executive managing director, Bouygues, Member, Autorité des marchés financiers (French equivalent of the Financial Services Authority) and Autorité des normes comptables (French equivalent of the International Accounting Standards Board)

Gilbert GÉLARD

Member, Board of International Accounting Standards Board (IASB)

Seminar Business life | Friday April 10, 2009 - 9h30 - 12h

Accounting standards, which are applicable to all European quoted companies since 2005, were the subject of numerous debates and controversy before they were validated, and were subsequently suspected of being the cause of the current financial crisis. The principle of fair value is contested in some of its applications, in particular when it leads to the valuation of a stock of shares at the previous day's stock market rate. Some people think that banks and insurance companies should not be subject to fair value because of their special nature. Nevertheless, having explored the ins-and-outs of this standardisation on an international scale, it would appear that standardisation has momentarily acted as a scapegoat to explain a crisis which has undoubtedly revealed other malfunctions of the global financial system which are much more worrying. In any case, this is Nicolas Véron's view, which is the subject of this talk.

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