Think of the investors. That's what everyone in the debate over fair-value accounting says, regardless of which side they're on.

But if a new survey is any indication, a push by the Financial Accounting Standards Board to have all financial instruments marked to market would be at odds with the preferences of most investors.

After conducting hourlong, face-to-face interviews with 62 users of financial statements, PricewaterhouseCoopers determined that a majority of respondents want to retain a more nuanced system, where the appropriateness of using fair value would be dictated by the characteristics of either the financial instrument itself or the company recording it.

Lest the banking lobby declare victory, very few investors are happy with the status quo.

Only 13% of the survey respondents said financial statements and disclosures are "sufficiently useful" in their current form. Investors want to know more about how financial instruments are valued, and how sensitive the values are to changes in key assumptions. They want more details about portfolio composition and risk. But they don't want to be inundated with dense, technical data that gets in the way of making sense of the disclosures.

Investors said it is important to see fair-value data on loans held for sale, equities owned for the long haul, traded securities and on derivatives. But they assigned less importance to fair value when it comes to deposits and loans held to maturity. For those kinds of assets, they indicated that amortized cost — the method currently used — is more useful to them.

Nonetheless, fair value never ranked below a 55 on a scale of 1 to 100, where 100 was "very important," when investors were asked to score the importance of having different kinds of data for various asset and liability categories. The results imply fair value is still helpful to investors, even in categories for which amortized cost measurements are considered more important. Yet complicating the debate over how companies ought to do their accounting, two-thirds of the respondents said they always or usually adjust reported fair values for financial instruments — usually to eliminate one-time events from core earnings, or to apply different assumptions into the valuation equations.

The intricacy of investors' responses, on everything from the kinds of data they prefer to see to the way in which they use the information, underscores the complexity of the fair-value debate, and serves as a reminder that investors' opinions on the topic cannot be neatly categorized. After all, how does one distill the wants and needs of a diverse group that includes individuals, institutions, short sellers, long-only holders, hedge funds, mutual funds, pension funds, equity funds, fixed-income funds and so on — all with different selection criteria and investment objectives?

"Part of what got us interested in doing the survey was there were various groups that seemed to be making assertions that investors wanted one thing or another," said Russ Mallett, a Pricewaterhouse partner who helped conduct the interviews with respondents. "The whole purpose of the survey was to provide additional information to consider, not necessarily to push the process in a specific direction."

The FASB has proposed making fair value the default standard for measuring all financial instruments. It will issue a final proposal after a public comment period that ends Sept. 30. Meanwhile, the FASB's overseas counterparts at the International Accounting Standards Board are backing rules saying that the structure and business purpose of an instrument should determine its accounting treatment, which is more in line with the views of investors in the Pricewaterhouse study.

Pricewaterhouse surveyed financial statement users in the U.S., Europe and Asia-Pacific, with some from the buy side, some from the sell side and some from credit rating firms. Some focused mainly on banking companies, while others focused on insurance companies or were generalists. In any case, they were people whose voices tend not to be heard in these kinds of debates, which typically draw more involvement from accountants, corporate lobbyists, statement preparers and academics.

"The fact that we got 62 people to spend an hour with us is an indication that they are happy to help" contribute to the process, Mallett said, but "it's not typically the first thing investors do, responding to accounting pronouncements and accounting debates."

Illustrating the point, survey respondents indicated that while fair-value measurements are useful to them in assessing banks, they rely even more heavily on data points regarding return on equity, net interest margin, credit trends, regulatory capital, management capital and future ability to generate cash flow.

"Do I think [fair value] really adds to the understanding of financial statements? No," said Michael Cuggino, president of the Permanent Portfolio Family of Funds, which oversees $6 billion of investment assets. FAS 157, the FASB's initial stab at laying out guidelines for when fair value should be used, "started splitting hairs in an area where I wasn't sure we needed to split hairs," he said.

But mutual fund manager Tom Forester of Forester Capital Management, who, like Cuggino, was not involved in the Pricewaterhouse study, said a lack of transparency about hard-to-value assets has turned him off from most bank stocks.

"These aren't hedge funds; these are guaranteed institutions. If they can't value something, what are they doing with it?" asked Forester, who estimates that his concentration of bank stocks has dropped to 5% from 20% over the past five years. But even he's not opposed to banks using amortized cost for plain-vanilla loans they plan to retain.

Marian Kessler, an analyst with Becker Capital Management, said the fair-value question is of less concern to her than the issue of off-balance-sheet accounting and the overall veracity of bank financial statements. "Hoping for black and white out of financial stocks is trying to really oversimplify something that is just not amenable to those rules," Kessler said. "You're going to have to live with complexity, you're going to have to live with uncertainty — which is why these stocks have a lower multiple than sectors that make tangible products. But that doesn't mean we shouldn't try to make the process as transparent as possible."

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