Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements

Chen Bu; Yuyu Zhang; Daifei Troy Yao

doi:10.1111/acfi.70022

Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements

Chen Bu, Yuyu Zhang, Daifei Troy Yao

Research output: Journal Publication › Article › peer-review

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.

Original language	English
Journal	Accounting and Finance
DOIs	https://doi.org/10.1111/acfi.70022
Publication status	Published - 29 Mar 2025

Keywords

auditor expertise
earnings persistence
fair value hierarchy
international banks
valuation specialists

ASJC Scopus subject areas

Accounting
Finance
Economics, Econometrics and Finance (miscellaneous)

Access to Document

10.1111/acfi.70022

Cite this

@article{4479e3e97a8548d79ef5c53c7c289ac6,

title = "Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements",

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.",

keywords = "auditor expertise, earnings persistence, fair value hierarchy, international banks, valuation specialists",

author = "Chen Bu and Yuyu Zhang and Yao, {Daifei Troy}",

note = "Publisher Copyright: {\textcopyright} 2025 The Author(s). Accounting & Finance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand.",

year = "2025",

month = mar,

day = "29",

doi = "10.1111/acfi.70022",

language = "English",

journal = "Accounting and Finance",

issn = "0810-5391",

publisher = "Wiley-Blackwell",

}

TY - JOUR

T1 - Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements

AU - Bu, Chen

AU - Zhang, Yuyu

AU - Yao, Daifei Troy

PY - 2025/3/29

Y1 - 2025/3/29

N2 - 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.

AB - 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.

KW - auditor expertise

KW - earnings persistence

KW - fair value hierarchy

KW - international banks

KW - valuation specialists

UR - http://www.scopus.com/inward/record.url?scp=105001795335&partnerID=8YFLogxK

U2 - 10.1111/acfi.70022

DO - 10.1111/acfi.70022

M3 - Article

AN - SCOPUS:105001795335

SN - 0810-5391

JO - Accounting and Finance

JF - Accounting and Finance

ER -

Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this