THE EVOLUTION OF FAIR VALUE ACCOUNTING: IMPLICATIONS FOR FINANCIAL STABILITY AND INVESTOR CONFIDENCE

Abstract

This paper explores the evolution of fair value accounting (FVA) and its implications for financial stability and investor confidence. FVA has undergone significant changes since its inception, particularly in response to financial crises and regulatory reforms. By analyzing key developments in accounting standards and practices, the study highlights how FVA affects the accuracy of financial reporting, the transparency of financial statements, and the overall trust investors place in the markets. Additionally, the research discusses the challenges associated with FVA, including volatility in asset valuations and the impact on financial institutions during economic downturns. The findings underscore the need for a balanced approach that enhances both transparency and stability in financial reporting, ultimately fostering greater investor confidence.