The evolution of fair value accounting in the USA: a critical examination of its progress since 1900

Despite the relevance of fair value accounting to the financial statements, it was not adopted by standard setting bodies until recently. This paper investigates the evolution of fair value accounting in the USA and shows that several factors, such as accounting standard setting bodies, government, business and investor-related issues contributed to the lack of adoption of fair value accounting between the 1930s and 1990s. The paper further discusses changes in the standard setting environment as well as other criteria, such as technological advancements, that have contributed to the recent adoption of fair value accounting.