Implications of fair value accounting for investors and analysts: making sense of their views through a competing rationalities approach.

This paper explores practitioners’ perspectives on the usefulness of Fair Value Accounting (FVA) drawn mainly from interviewing 28 investors and analysts based in London. The paper attempts to make sense of intricacies of acceptance and resistance to FVA by analysing investors’ and analysts’ views through the concept of ‘competing rationalities’ and in particular the four Weberian rationalities - theoretical, practical, formal and substantive - that coalesce and compete with each other guiding actors’ perceptions and actions. The paper contends that economic rationales for the functionality (formally rational elements) of FVA only partially impinge on investors’ and analysts’ views and actions. Whether such elements of acceptance and resistance will continue to cause tensions and change is also explored.