Much of the debate around the Green Paper has been focused on the question whether it is fair value accounting that leads to short-termism in investor behaviour.

Although EFRAG does not deny that fair value accounting may contribute to a limited degree to short-termism in investor behaviour, it comments that it "does not make any sense to ban fair value as such". EFRAG states that when selecting the measurement basis for a particular item, the IASB should consider carefully what information that measurement will produce and then propose the most suitable measurement basis. According to EFRAG it is then also the constituents' responsibility to "ensure that fair value measurements are mandated only when they support high quality financial reporting".

EFRAG also looks at the relationship between prudence and the use of fair value and concludes:

Exercising prudence does not, in itself, rule out measurement at fair value (or any other form of current value). If estimates provided have the appropriate level of reliability, and the use of current values provides the best representation of how assets and liabilities contribute to the entity's financial position and performance, then the use of fair value should be required.

A large part of the comment letter is also dedicated to EFRAG's consultation on a "long-term investment" business model and the recommendations made to the IASB as a result of the consultation.

Please click for access to the comment letter on the EFRAG website. Other reactions to the Green Paper (e.g. by the IASB, FEE, Deloitte) had taken a similar view and concluded that fair value accounting principles have of themselves not led to short-termism in investment behaviour.