Lecture 5: Bougen, Philip and Young, Joni (2012), “Fair value accounting: Simulacra and simulation

Question 1

What is the paper investigating?

Answer 1

The paper examines the application of simulacra and simulation in fair value accounting for financial instruments in the US.
And challenges the FASB insistence that fair value accounting is an orginary market-based measurement system.

Question 2

What is the aim?

Answer 2

To study “How reality might be imagined and re-imagined.”

Question 3

What is the contribution?

Answer 3

1. Debate whether fair value and its merits
2. In order to discuss the imaginary properties of markets and Fair value accounting in particular imagination and re-imagination of reality and fair values.

Question 4

What are the findings?

Answer 4

1. They show how simulacra are employed for specific financial instruments as a measurement basis
2. They also show the absence of market reality and how FASBs modifications of FAS 157 was made to meet political forces.
3. They illustrate how participants trying to assign FV to financial instruments must use simulacra.

“Develop their own coherence and are subject to continues reformulation and recalibration, generating new facts and new copies”

Question 5

What is simulacra?

Answer 5

Copies of copies are produced in a repetitive process of simulation.

(They are constantly reimagined until they get a false meaning.)

A way of thinking about imaginaries, which allow reality to evaporate into hyperreality as copies increase.

Question 6

What is simulation?

Answer 6

A simulation threatens the difference between “true” and “false”, between “real” and “imaginary”.

Question 7

What does the article want to show?

Answer 7

It is a critical theory, and this Hyperreality affects how we see the fair value, and our financial reports are affected because of simulacra.