Review of Accounting Studies

, Volume 23, Issue 4, pp 1274–1314 | Cite as

Asset use and the relevance of fair value measurement: evidence from IAS 41

  • Adrienna HuffmanEmail author


This study investigates whether asset use influences the relevance of fair value measurement. Specifically, I examine whether fair value is more relevant when it is applied to in-exchange assets than when it is applied to in-use assets. I test the framework on a sample of international firms that adopt International Accounting Standard 41. Using a difference-in-differences approach, I find that earnings information is significantly more relevant when firms measure in-exchange biological assets at fair value, but book value and earnings information is significantly less relevant when firms measure in-use biological assets at fair value. Consistent with these results, in cross-sectional analyses I find that investors discount the fair value of in-use biological assets and their associated unrealized gains and losses relative to the fair value of in-exchange biological assets. At present, the Conceptual Framework provides little guidance on asset measurement, resulting in inconsistencies across measurement standards. Thus, my findings may provide insight to standard setters and those interested in conceptually based asset measurement.


Asset measurement Fair value Asset use IAS 41 biological assets Conceptual Framework 

JEL classification




I thank the editor (Richard Sloan) and two anonymous reviewers for their helpful comments. This study is based on my dissertation at the University of Utah’s David Eccles School of Business. I am particularly grateful to Steve Stubben for all of his help and guidance on this project. In addition, I thank my dissertation committee: Christine Botosan (chair), Melissa Lewis-Western, Marlene Plumlee, Jim Schallheim, and Haimanti Bhattacharya. I also thank Gus DeFranco, Lynn Hannan, and workshop participants from the BYU Research Symposium, the University of Utah, the FDIC, Tulane University, LSU, and the 2015 FARS Conference. This study was a finalist for the Best Paper Award at the 2015 Financial Accounting Reporting Section Mid-Year Conference.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.A.B. Freeman School of BusinessTulane UniversityNew OrleansUSA

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