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The concept of market value in thin markets and its implications for international accounting rules (IFRS)
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0003-3702-1502
Karlstads Univ, Karlstad, Sweden..
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. 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, IFRS, Property valuation, Market value, Fair value, Thin markets
National Category
Business Administration
Identifiers
URN: urn:nbn:se:kth:diva-249858DOI: 10.1108/JPIF-02-2019-0022ISI: 000462759500005Scopus ID: 2-s2.0-85063326623OAI: oai:DiVA.org:kth-249858DiVA, id: diva2:1307250
Note

QC 20190426

Available from: 2019-04-26 Created: 2019-04-26 Last updated: 2019-04-26Bibliographically approved

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Lind, Hans

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  • apa
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  • nn-NB
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  • Other locale
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Output format
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