Mark To Management

Definition of 'Mark To Management'


The theory that a good, asset/liability or service can be assigned a fair market value based not necessarily on current or historical market price but rather on the holder's assumption of what the good, asset/liability or service could potentially be worth to a buyer in either an actual or hypothetical market. It involves not only evaluating historical market pricing and external market observations but also non-observable assumptions surrounding the good, service or asset/liability based on internal information.

It is cited as a way of determining the potential value of an item, service or asset for which there currently is not an existing market or because the market is experiencing enormous volatility, making fair value assignment difficult if not impossible under standard mark to market accounting.

Investopedia explains 'Mark To Management'


Mark to management accounting became a hot topic of discussion regarding bank-owned "toxic assets" following the housing market collapse of 2007-2009. In the spring of '09 the Financial Accounting Services Board (FASB) agreed to "relax" its rules on mark to market accounting and lean toward a mark to management approach to asset/liability valuation. Critics charge that the move was designed to aide banks, lenders and financial services companies soften the perceived losses they incurred after the market collapse.

Charles Bowsher, former chairman of the Federal Home Loan Bank System's Office of Finance, resigned his position over the FHLB's support for a mark to management approach to fair market valuation of troubled assets.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  2. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  3. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  4. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  5. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
  6. Negative Carry

    A situation in which the cost of holding a security exceeds the yield earned. A negative carry situation is typically undesirable because it means the investor is losing money. An investor might, however, achieve a positive after-tax yield on a negative carry trade if the investment comes with tax advantages, as might be the case with a bond whose interest payments were nontaxable.
Trading Center