Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements
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Zhang, Yuyu
Yao, Daifei
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Abstract
We investigate the significance of valuation specialists within audit teams in shaping the association between earnings persistence and banks' exposure to Level 3 fair value measurements (FVMs). Using a sample of international banks, we find that a bank's exposure to Level 3 FVMs improves earnings persistence only when auditors engage valuation specialists for Level 3 FVMs. Our findings suggest that valuation specialists are more likely to complement auditors' expertise in auditing Level 3 FVMs, thereby enhancing the reliability of audited Level 3 FVMs and strengthening the association between earnings persistence and Level 3 FVMs.
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Accounting & Finance
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© 2025 The Author(s). Accounting & Finance published by John Wiley & Sons Australia, Ltd on behalf of Accounting and Finance Association of Australia and New Zealand. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
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Accounting, auditing and accountability
Banking, finance and investment
Applied economics
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Bu, C; Zhang, Y; Yao, D, Valuation Specialist, Earnings Persistent and Level 3 Fair Value Measurements, Accounting & Finance, 2025