Philippe Danjou remarks on long-term investment

  • Danjou (50 x 80) Image

10 Jun, 2014

On 4 June 2014, at a roundtable event hosted by the OECD and the Ministry of Finance of Singapore, IASB member Philippe Danjou provided his views on the importance of long-term investing, the misconception of fair value, and the IASB’s goals for its accounting standards financial instruments and insurance contracts.

In his remarks, Mr Danjou focused on four points:

  1. Long-term investment provides a key source of funding for companies; therefore, it is important the IASB “develop financial reporting standards that help investors make sound capital allocation decisions.”
  2. There is little evidence that measurement tools, such as fair value, have contributed to short-termism in financial markets.
  3. There is limited use of fair value outside of the financial services sector and that “[f]air value accounting, where it is a relevant measure, enables transparent and timely reporting of the ‘bad news’, which is essential for sound investment decisions.”
  4. The upcoming Standards on financial instruments and insurance contracts are aimed to be more closely aligned with business models of the banking industry and improve transparency. The IASB does not expect an increased use of fair value accounting.

For more information, see the press release and the full transcript on the IASB’s website.

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