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The concept of market value in thin markets and its implications for international accounting rules (IFRS)

Hans Lind (Department of Building and Real Estate Economics, Kungliga Tekniska Hogskolan, Stockholm, Sweden)
Bo Nordlund (Karlstads Universitet, Karlstad, Sweden)

Journal of Property Investment & Finance

ISSN: 1463-578X

Article publication date: 20 March 2019

Issue publication date: 29 March 2019




The purpose of this paper is to discuss how the concepts market value (MV) and exit price should be interpreted in thin markets and how accounting rules may need to change to take this into account.


This is a conceptual paper using hypothetical examples as a base for the conclusions.


In a thin market, actors can have rather different reservation prices. The price will then be set through bargaining and the agreed price could be considerable above the reservation price of the actor with the second highest reservation price. The exit price should then be below what the MV was before the transaction and below the entry price, and according to the current accounting rules, the value in the balance sheet should then be below the price paid. The authors’ experience is, however, that this rarely happens in practice.

Research limitations/implications

The limitation of the paper is that it is a conceptual paper and not based a systematic empirical study of accounting practices.

Practical implications

The results of the paper indicate that there is a need to revise the current accounting rules. Possible changes are discussed.


As far as the authors know, this is the first paper that looks at problems in the current value concepts related to differences in reservation prices in thin markets.



Lind, H. and Nordlund, B. (2019), "The concept of market value in thin markets and its implications for international accounting rules (IFRS)", Journal of Property Investment & Finance, Vol. 37 No. 3, pp. 301-310.



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