Value Relevance of IFRS13 Fair Value Hierarchy Information in Palestinian Financial Institutions
This research aims to study whether fair value hierarchy affects value relevance of Palestinian portfolios, especially level three, due to unobservable inputs use on it. To achieve this goal and to answer the research questions, the researcher used regression model which mainly includes fair value levels as independent variables, and stocks price, for those companies have portfolios, as a dependent variable. The targeted population is the Palestinian financial organizations (13 institutions) that include portfolios under Palestine Exchange (PEX) from period 2011 to 2016 which is the most recent period. The research results showed that the fair value hierarchy significantly affects the relevance and reliability of information presented to the investor's, the fair value level 3 assets are significantly priced higher than level 1 and 2 fair value assets. Finally, level 3 gains do not reduce investors' pricing of Level 3 asset, due to the investors’ trust in entities’ information, since it is audited and disclosed in the financial reports in accordance with the requirements of standards. This research recommended to improve Palestinian Capital Market, to restore investor's trust, maintain management transparency and governance, increase investor's awareness of the fair value and conduct additional research to be carried out to gain a continuous view, knowledge, and insight of value relevance of IFRS 13 fair value hierarchy information in Palestinian institutions.