On the contrary, Bleck and Liu (2007) found that historic
cost accounting makes easier to hinder bad investment projects, prevents from
liquidating them, therefore accumulating volatility to hit the market at a later date and produce crash prices, increasing overall volatility and reducing efficiency (i.e. reducing
profitability) with respect to market valuation. Gigler etal. (2006) concluded that even
in the case of mixed attribute report (i.e., some items are valued at market while others
are carried at historical cost), fair value performs better: it provides stronger signals of financial distress. All these previous mentioned studies are analytically and mainly use mathematical models. However, to our knowledge, there are few empirical studies
contrasting hypotheses on these issues. Hann etal. (2007) found empirical evidence of
fair-value pension accounting not improving the informativeness of the financial
statements and even impairing it. Slightly related to these issues, Beaver et al. (2005)
found a small decline in the ability of financial ratios to predict bankruptcy from 1962
to 2002, and an incremental explanatory power of market-related variables over this
period. They explain the deterioration of predictive ability of financial ratios in terms of
an insufficient improvement of FASB standards.