Differential pricing of discretionary , nondiscretionary and noise components of loan fair values =

  title={Differential pricing of discretionary , nondiscretionary and noise components of loan fair values =},
  author={William Beaver and Mohan Venkatachalam},
Using a sample of banks, this study examines the capital market pricing implications of three components of loan fair values. We find that the nondiscretionary component is priced on a dollar-for-dollar basis, the discretionary component is assigned a significantly larger multiple than the nondiscretionary component and the noise component is not priced. This implies that the relevance and reliability of loan fair values differs across the three components. The larger multiple assigned to the… CONTINUE READING


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