The Influence Of Application Of The Fair Value On Earnings Management

China has cited fair value in the old criterion, but because companies manipulate the accounting profits by fair value, so the Ministry of Finance has stopped the application of fair value.One of the biggest highlights in new accounting standards is the application of fair value in financial instruments, investment property, debt restructuring, non-monetary assets exchange and business combination under no-common control.The research of fair value once again become a hot spot, the use of fair value has caused a heated discussion in theory and practice field.This paper reviews some research literatures which have related to the fair value and earnings management, then found that the conclusions that infulence of application of the fair value on earnings management is not uniform, a few of empirical studies have conclusions which generally focus on the individual aspects to application of fair value or individual industries, so the conclusions are not universal, and some conclusions are contradictory. This researches provide my paper some valuable opinion and also left room for innovation for my paper.on the basis of Drawing previous studies, by analyzing the specific accounting standards in which have application of fair value left to enterprises the space of choice and manipulation, this paper proposed some hypothesis and designed the corresponding explanatory variables; also discussed the norm of earnings managemen—Jones model. two variables are added in this paper to control the different industry in earnings management and macroeconomic factors in different years, This paper selected 4361 samples from 2007 to 2009, using Eviews statistical analysis software, the empirical research analysis the earnings management of listed companies from the main areas of application of the fair value. the study found, because the accounting standards on the application of fair value have many restrictions, China's listed companies avoid the application of the fair value, so which hindered the application of fair value accounting; In addition, listed companies don't exist earnings manipulation behavior by using of fair values. The study also found that asset size , asset-liability ratio and motivation of access to insurance of shares qualification exists some positive correlation to the earnings management, there is no significant correlation between the small profit and earnings management,and between whether the first two years of consecutive losses and earnings management. This paper argues that the purpose for the application of the fair value in the new accounting standards is to serve the capital markets and securities, there is no obvious signs of being used to manipulate earnings. This paper also suggested that with the overall convergence of international accounting standards, the restrictions on the application of fair value should be relaxed, and we should develop a unified standard and draw up operational guidelines for the use of fair value.Listed companies should enhance disclosure of fair value information for each fair value accounting element.Only in this way, can the application of the fair value play positive effect.