Mark-to-Model - An Explanation of the Choice and Relative Use

Abstract: Title: Mark-to-Model – An Explanation of the Choice and Relative Use Seminar Date: 2012-05-31 Course: BUSN69, Degree Project – Accounting and Auditing. Master of Science in Business and Economics, 15 ECTS. Authors: Mikael Svensson and Alexander Wingren Supervisor: Torbjörn Tagesson Key Words: Financial Instruments, Mark-to-model, Fair value accounting, Level 3 and IFRS 7 Aim: The aim with this thesis is to explain the choice and the relative use of mark-to-model when determining fair value of financial instruments in companies within the financial industries listed at Nasdaq OMX Nordic. Methodology: This thesis uses a deductive and quantitative approach in analysing 101 annual reports. Logistic regression and linear regression have been used in order to analyse the data. Theoretical Approach: This thesis uses a multi-theoretical approach based on both economic-oriented and system-oriented theories. Empirical Foundation: 101 annual reports from companies within the financial industries listed at Nasdaq OMX Nordic have been analysed. Conclusions: The choice of mark-to-model is influenced by the industry of the company and management bonus schemes connected to profit. The relative use of mark-to-model is influenced by the size and the audit firm of the company.