The financial collapse of European banks during the 2009–2012 Global Financial Crisis underscored the risks of inadequate risk disclosures. Many banks failed to disclose sufficient information about the risks they were exposed to, which contributed significantly to the crisis. One of the main issues involved the reliability of accounting numbers under fair value accounting, which some critics argue exacerbated the crisis. This approach fueled excessive leverage during boom periods and asset write-downs during downturns. The fair value hierarchy, particularly Level 3 assets, was a key concern. These assets often involved subjective judgment, less precise measurements, and management manipulation, leading to increased information risks. Studies have found that assets with more uncertain fair value estimates are perceived as less valuable and carry higher information risk, leading to higher capital costs for banks. Moreover, companies with a higher proportion of Level 3 assets tended to provide more voluntary disclosures to mitigate this risk. The effects of increased disclosure on information asymmetry remain debated. On one hand, some argue that transparency reduces information asymmetry. On the other hand, others suggest that it my drive more private information production, increasing asymmetry. Empirical evidence presents mixed findings on how fair value accounting impacts information asymmetry. Ultimately, the relationship between transparency, fair value accounting, and information asymmetry is complex  and context-dependent.