How fair is fair value?

Question

I have to write a report for my third year accounting degree about 'how fair is fair value?' I've found a paper by Ernst and young under that title, but haven't found any other sources. Anyone who could point me in the direction of some would be greatly appreciated. Thanks in advance

Answer 1

The question requires you to step back and place fair value in a larger context. There is nothing inherently fair or unfair about establishing a value or price on a good or service. First, you will need to establish the *principles* or *criteria* for fairness (e.g., fair value relative to supply & demand, relative to comparables). I.e., what does fairness mean in pricing? Narrow your analysis to a particular market so you can dive more deeply with examples. Make a visit to your university library's research librarian, but schedule an appointment before you show up. This wonderful person will almost certainly have pulled references from the shelves (including journal issues) for you before you get there. You will need to read for a few hours, perhaps even reading some legal case studies. At this point, you are ready to define your notion of "fair." Then you can compare that with examples of establishing "fair value." You will probably do better with trade magazines (meant for a general audience) than with academic journals, unless you can find special issues on fair value considerations. Again, you will find yourself at the crossroads of legal journals and business journals. Understand the Fair Value Measures Board standard that is currently in review; at least understand the overview. Finally, don't forget that experts in the field are legitimate sources of information. Set up an interview with an expert to be held after you've done your homework on this subject. Feel free to try out your thesis on the fairness of fair value. And have fun with this.