Using an international sample of 222 banks from 41 countries, this study examines whether the fair value option (FVO) affects earnings volatility. Prior empirical studies associate higher levels of earnings volatility with fair value accounting (Barth et al. 1995; Hodder et al. 2006). In contrast, I...

This study examines whether the application of the fair value option (FVO) induces different levels of earnings volatility during the time period from January 2006 until July 2007 using an international sample of 227 banks from 42 countries. Although fair value accounting is generally believed...