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This study explores the link between accounting regulations and market inefficiencies, focusing on the U.S. market in years 2007 and 2008. Specifically, this study examines the effectiveness of U.S. GAAP Fair Value Measurements (FAS 157) and Financial Instruments: Recognition and Measurement (IAS 39), which is an international accounting regulation. Some research questions of interest explored in this study are the following: did these accounting regulations work effectively during a period of market inefficiencies? What was the difference in performance between firms that applied FAS157 and IAS 39 during the period of study and those that did not? Moreover, this study also looks at the effects of conservative accounting during a period of market inefficiencies.

accounting, accounting regulations, market inefficiencies