Work

Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements

Year: 2025

Type: article

Abstract: ABSTRACT We investigate the significance of valuation specialists within audit teams in shaping the association between earnings persistence and banks' exposure to Level 3 fair value measurements (FVMs). Using a sample of international banks, we find that a bank's exposure to Level 3 FVMs improves earnings persistence only when auditors engage valuation specialists for Level 3 FVMs. Our findings suggest that valuation specialists are more likely to complement auditors' expertise in auditing Level 3 FVMs, thereby enhancing the reliability of audited Level 3 FVMs and strengthening the association between earnings persistence and Level 3 FVMs.

Source: Accounting and Finance

DOI: 10.1111/acfi.70022

Authors: Chen Bu, Yuyu Zhang, Daifei Yao

Institutions: University of Nottingham Ningbo China, University of Nottingham, Queensland University of Technology, Griffith University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,470

OpenAlex ID: W4408992851

FWCI: 13.5

Cites: 91

Cited by: 5

Related to: 10