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NTU Management Review Vol. 35 No. 2 Oct. 2025

a range of industries. Additionally, as even sophisticated financial statement users require
time to adapt to new standards, companies and standard setters may explore innovative
means of easing the transition and improving understanding for a wider range of financial
statement users.

The paper is organized as follows. Section 2 discusses this study’s background,
conducts a review of the literature, and develops our hypotheses. Section 3 details the
research design. Section 4 discusses the sample-selection process and descriptive statistics.

Section 5 reports the empirical results. Section 6 presents some additional analyses, and,
finally, Section 7 concludes the paper.

2. Related Accounting Standards, Literature Review, and
Hypothesis Development

2.1 Evolution of Accounting Standards for REITS Firms in the US and UK
To examine how fair value accounting impacts analyst behavior, we examine publicly
traded investment property firms domiciled in the US and the UK with a particular focus

on how accounting standards under their respective reporting regimes affect analyst
forecast properties. In our sample period, US firms report properties, plants, and equipment
at historical cost subject to impairment, while UK firms report real estate assets at fair
value. As UK firms were subject to a shift in standards of fair value reporting in 2005—
from the partial fair value model to the full fair value model—we discuss the UK reporting

regime in greater detail.
Prior to 2005, UK investment property firms followed domestic standards: the
Statement of Standard Accounting Practice No. 19 (hereafter SSAP No. 19) for valuing

properties. SSAP No.19 required firms to report real estate at “open market value” on the
balance sheet and to report unrealized fair value gains/losses in a “revaluation reserve”
account, without them passing through net income. Beginning on January 1, 2005, the
UK adopted IFRS, mandating that firms follow International Accounting Standard 40
for investment properties (hereafter IAS 40). IAS 40 permits firms to choose between

a fair value model and a cost model. This choice is available because the International
Accounting Standards Committee (IASC) believes that allowing firms to choose between
two reporting models grants firms and investors more time to get experience with the fair

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