Journal of Accounting Institute
Determining The Input Levels Used in Measuring Fair Value: Research Into BIST CompaniesRümeysa Atıcı
The primary purpose of this study is to present the general view of the reported assets and liabilities of the companies operating in the financial institutions sector by using the fair value hierarchy levels. The second purpose is to reveal the input levels companies operating in the financial institutions sector use when measuring their assets and liabilities. The research includes within its scope 139 companies operating in the financial institutions sector in 2021 and uses the qualitative research method of descriptive analysis. According to the analysis results, companies are seen to generally report their combined liabilities and assets using Level 2 inputs. Companies have also mainly been determined to individually report their liabilities using Level 2 inputs and their assets using Level 1 inputs. The companies that report their assets and liabilities using Level 3 inputs have been determined to be few in number.
Gerçeğe Uygun Değer Ölçümünde Kullanılan Seviye Girdilerinin Tespiti: BIST Şirketlerinde Bir AraştırmaRümeysa Atıcı
Bu çalışmanın birinci amacı, mali kuruluşlar sektöründe faaliyette bulunan şirketlerin gerçeğe uygun değer hiyerarşisi seviyelerini kullanarak raporlanan varlıklarının ve yükümlülüklerinin genel görünümünü ortaya koymaktır. İkinci amacı ise, mali kuruluşlar sektöründe faaliyette bulunan şirketlerin varlıklarının ve yükümlülüklerinin ölçümünde kullandıkları seviye girdilerini ortaya koymaktır. 2021 yılında mali kuruluşlar sektöründe faaliyette bulunan 139 şirket araştırma kapsamına dâhil edilmiştir. Araştırmada nitel araştırma yöntemlerinden biri olan betimsel analiz yöntemi kullanılmıştır. Analiz sonuçlarına göre, şirketlerin genel olarak Seviye 2 girdisini kullanarak varlıklarını ve yükümlülüklerini raporladıkları tespit edilmiştir. Şirketler, varlıklarını ağırlıklı olarak Seviye 1 girdisini kullanarak raporlarken, yükümlülüklerini Seviye 2 girdisini kullanarak raporladıkları tespit edilmiştir. Seviye 3 girdilerini kullanarak raporlanan varlıkların ve yükümlülüklerin sayıca az olduğu tespit edilmiştir.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants for the date being measured. For markets that are efficient, fair value actually refers to the market price. The Turkey Financial Reporting Standards (TFRS 13) classifies inputs as Level 1, Level 2, and Level 3 inputs for measuring fair value when reporting assets and liabilities. Assets and liabilities measured using Level 1 inputs are measured and reported with market values reflecting the quoted prices in active markets. In the absence of an active market, fair value when measuring assets and liabilities is a Level 2 input based on measurements that take into account the quoted prices of similar assets and liabilities in active markets. Level 3 inputs are based on measurements in which valuation is made in the absence of an active market regarding assets and liabilities. While advocates of fair value accounting argue it to provide useful information to information users regarding their decision making, those who do not advocate fair value accounting criticize its ability to cause volatility in financial statements by affecting management’s economic decisions regarding ineffective markets. In fact, fair value accounting was developed as a response to historical cost accounting, because historical cost accounting was unable to adequately provide information that was relevant to the needs of information users. Fair value accounting, however, ensures that information users are presented with fair and useful information by reporting value according to the principles of accountability and comparability, which are important principles in accounting. In fact, the need for useful information is also able to affect financial reporting, with fair value accounting being a critical issue that additionally affects financial reporting.
Based on the explanations made above, the first purpose of the study is to present the general view of the reported assets and liabilities of companies operating in the financial institutions sector using the fair value hierarchy levels. The second purpose is to reveal the input levels companies operating in the financial institutions sector use when measuring their assets and liabilities. For these purposes, the study examines the footnotes of the financial statements of 139 companies operating in the financial institutions sector in 2021. Quantitative research analyzes data using statistical methods and mathematical operations. The main point in qualitative research is to provide, summarize, and interpret meaningful content. This study uses the qualitative research method of descriptive analysis to determine the input levels companies use when measuring their assets and liabilities. This descriptive analysis will also summarize and report on the findings. According to the descriptive analysis results, companies operating in the financial institutions sector in 2021 were seen to generally report their combined assets and liabilities using Level 2 inputs. Financial institutions are mainly seen to individually report their assets using Level 1 inputs and their liabilities using Level 2 inputs. It has been determined that 22% Of the account items reported using Level 1 inputs, 22% have been determined to be financial assets at fair value through profit or loss, while 3% are debt securities. Of the account items reported using Level 2 inputs, 21% have been determined to be from investment properties and 11% to be from derivative financial liabilities. Of the account items reported using Level 3 inputs, 25% have been determined to consist of investment properties and 3% to consist of financial liabilities. Much fewer assets and liabilities have been determined to be reported using Level 3 inputs. Future studies can investigate whether a relationship exists between fair value accounting and financial crises over a Turkish sample.