A Review of the Role of Financial Reporting in the Global Financial Crisis

Abstract

The aim of this article is to review the recent literature that examines the performance of financial reporting in the Global Financial Crisis (GFC). In analysing the GFC a large number of commentators have attributed blame to financial reporting, in particular to the use of fair values (FVs) in reporting financial instruments in bank balance sheets. Based on a review of the emerging evidence, the main conclusions are that: (i) there is no empirical evidence that fair-value accounting (FVA) during the GFC added to the severity of the crisis; (ii) further research is required to determine whether FVA in the years immediately preceding the crisis exacerbated the GFC because of the possibility ..