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The concept of market value in thin markets and its implications for international accounting rules (IFRS)
KTH, Stockholm.
Karlstad University, Faculty of Arts and Social Sciences (starting 2013), Karlstad Business School (from 2013).
2019 (English)In: Journal of Property Investment & Finance, ISSN 1463-578X, E-ISSN 1470-2002, Vol. 37, no 3, p. 301-310Article in journal (Refereed) Published
Abstract [en]

Purpose: The purpose of this paper is to discuss how the concepts market value (MV) and exit price should be interpreted in thin markets and how accounting rules may need to change to take this into account. Design/methodology/approach: This is a conceptual paper using hypothetical examples as a base for the conclusions. Findings: In a thin market, actors can have rather different reservation prices. The price will then be set through bargaining and the agreed price could be considerable above the reservation price of the actor with the second highest reservation price. The exit price should then be below what the MV was before the transaction and below the entry price, and according to the current accounting rules, the value in the balance sheet should then be below the price paid. The authors’ experience is, however, that this rarely happens in practice. Research limitations/implications: The limitation of the paper is that it is a conceptual paper and not based a systematic empirical study of accounting practices. Practical implications: The results of the paper indicate that there is a need to revise the current accounting rules. Possible changes are discussed. Originality/value: As far as the authors know, this is the first paper that looks at problems in the current value concepts related to differences in reservation prices in thin markets.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2019. Vol. 37, no 3, p. 301-310
Keywords [en]
Accounting, Fair value, IFRS, Market value, Property valuation, Thin markets
National Category
Business Administration
Research subject
Business Administration
Identifiers
URN: urn:nbn:se:kau:diva-71761DOI: 10.1108/JPIF-02-2019-0022ISI: 000462759500005Scopus ID: 2-s2.0-85063326623OAI: oai:DiVA.org:kau-71761DiVA, id: diva2:1302734
Available from: 2019-04-05 Created: 2019-04-05 Last updated: 2019-04-11Bibliographically approved

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Nordlund, Bo

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Citation style
  • apa
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Language
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Output format
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