The Market-to-market experience during the global crisis

Purpose: To study political aspects of accounting standard setting. Originality: This aspect of the global financial crisis has not been addressed by the literature before. Key literature / theoretical perspective: Critical perspectives on accounting Design/methodology/approach: Historical narrative Findings: The paper narrates the history of mark-to-market accounting during the global financial crisis from 2008 to 2010. During that period the concept become deployed in the political armory of opposing interests. Banks claimed that mark-to-market had caused or exacerbated the crisis. Those opposed to the banks (accounting professionals, standard setters, advocacy groups) claimed that mark-to-market gave appropriate valuations of financial businesses that had mismanaged their own investment risks. These political differences reached a public climax in a US House of Representatives committee hearing. Following this, accounting standard setters were forced to mediate the accounting rules for investments to soften the impact of mark-to-market. Research limitations/implications: Implications for accounting standard policy. Practical and Social implications: Understanding of political activity.