Valuation scepticism, liquidity benefits and closed-end fund premiums/discounts: evidence from fair value disclosures
type="main" xml:id="acfi12023-abs-0001"> <title type="main">Abstract</title> <p>Closed-end fund investors may view assets valued using level 2 and 3 inputs more sceptically because of the subjectivity of these inputs (valuation scepticism), or these assets could be viewed favourably because they allow small investors to access illiquid securities (liquidity benefit). We find that funds holding level 3 assets have higher value when funds trade at a premium, but lower value when funds trade at a discount. Both of these effects are magnified for funds with higher levels of unrealized appreciation. Our results suggest that liquidity benefit (valuation scepticism) is more important when funds trade at a premium (discount).
Year of publication: |
2014
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Authors: | Cullinan, Charles P. ; Zheng, Xiaochuan ; Cahan, Steven |
Published in: |
Accounting and Finance. - Accounting and Finance Association of Australia and New Zealand - AFAANZ, ISSN 0810-5391. - Vol. 54.2014, 3, p. 729-751
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Publisher: |
Accounting and Finance Association of Australia and New Zealand - AFAANZ |
Saved in:
Online Resource
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