Fair Value Measurement : A Bergson's “False Problem” ?

The lasting lack of consensus in the abundant accounting literature relative to the topic of measurement and fair value (Barth, Biondi, Casta and Colasse, Penman…) characterizes an inexhaustible issue, if not irreconcilable. The novel stance chosen here tests the interpretation of conceptual candidates to measurement in accounting – and specifically fair value – in the lens of Henri Bergson’s methodology, a French philosopher, also a Nobel Prize winner.

While started with ancient Greek philosophers and pursued with Porphyry of Tyre, a debate which initially opposed the concepts of material reality and essentiality of objects became prominent in French middle age works (Auriol, De Gand) to go down in history as the “querelle des universaux” (the quarrel of universals). This quarrel, mostly opposing seculars and believers, unfortunately came to a deadlock while searching for best practices in classification and differentiation, with continuously improved methods (Eco). New insights were thinkable centuries later thanks to Bergson and his followers, with the introduction of a new perception of time and the renewed concern about cartography. The historically rooted convictions are exposed in our first part.

Our second part examines the matrix through Bergson’s methodology as captured by Deleuze into four acute questions, with a special attention to the notion of Fair Value. Our conclusion suggests that the problem has been poorly addressed as content of the methods and their results may be confused. Therefore, the way Fair Value has been brought forward may be a “false problem”.

The contribution of our work moves further. Our last part offers in a bottom-up process, a review of the existing evaluation methods, such as the empirical methods such as the 25% rule and comparables or the normative methods, like the cost approach or the DCF one, with the real option approach is still a field candidate. The observation of the practices highlights a trend towards more complex developments in the applied exercise in economics that a project evaluation is.

The last part of our research is a clinical step deconstructing the available technical tools for evaluation in order to identify their specificities. We attempt to pedagogically present evaluation methods according to their aims and other characteristics in line with Bergson’s and his inspirers’ and followers’ recommendations. This further allows unveiling the detailed purposes and underlying hypothesis of each evaluation method while offering a flavor of essence of measurement. To do so, we are mobilizing mixed notions such as Luhmann’ theory of communication, risk (embedded and captured), temporal orientation (past, present and future), reliability…

This deconstruction (considering a “false problem”) and a comprehensive conceptual assessment of the methods allows us to distinguish their discriminative characteristics. On those bases, we suggest to classify them according to a porphyrian tree in a way that should sound both familiar and sensed to financial users but less usual to accountants. This exercise leads to the provision of a typology projected in our Euclidian conceptual framework, as introduced in our first part.