The possible motives for individuals from financial services to
support fair value accounting are complex and numerous. First,
investment banks and asset managers are accustomed to using the
fair value in their day-to-day business to prepare in-house balance
sheets for risk-management purposes. This familiarity with the
method may have shaped their preferences in public financial
reporting standards. Second, GAAP profits defined on a fair value
basis rather than a historical cost basis accelerate the recognition of
gains, particularly in periods of rising asset prices. To the extent that
managerial bonuses are based on GAAP profit numbers, financial
services executives reap richer rewards in a fair value regime. Third,
the use of fair value to determine impairment of goodwill from M&A
activity (instead of the historical cost approach of amortizing
goodwill) imposes, on average, less drag on earnings, thus potentially
boosting M&A activity—a major revenue source for investment
banks. We should consider in fair value accounting：
