Research On Relevance And Reliability Of Accounting Information Under The Fair Value

The choice of measurement attribute determines whether the accounting information meets the quality requirement and achieves accounting's objective. The fair value measurement has been paid much attention along with the massive production of derivative financial instruments and emerging of the historical costs measurement's limitation. When the fair value was considered to be the most scientific reasonable measurement attribute and was used widely, the sub-prime crisis eruption causes heated debate about measurement-saving or abandoning. Therefore, this paper studies accounting information's relevance and reliability in terms of fair value based on combination standard research with empirical research, the conclusions are as follows:The essential connotation of fair value is the market oriented participated pricing, it has realized coordination of relevance and reliability. Under the historical costs the accounting information does not reflect the future cash flow and risks of enterprises. The accounting information which can reflect future cash flow and its risks is selected according to relevant request under the fair value. Therefore, accounting information under the fair value satisfies the relevance and reliability characteristics theoretically.This paper tests relevance and reliability of fair value information taking advantage of the mathematical model. The model takes the share price as a dependent variable and takes net assets per stock as an independent variable. The net assets equal the profits and losses on the changes in fair value per share deducted the profits on the changes in fair value per share, net change in fair value of financial assets available for sale per share and net assets after the fair value of financial assets available for sale per share. The model selects complete profit-making companies in A share market in Shenzhen and Shanghai Stock Exchange which was disclosed in the annual report in 2009 and then takes them as an overall sample. The model tests itself on the whole and carries on T-test to the correlation coefficient using the multiple regression method.The conclusion is that the model is linear on the whole remarkably, there is a remarkable relevance relation between the variable and share price, the variable is the profits and losses on the changes in fair value per share deducts the profits on the changes in fair value per share. But there is no remarkable relevance relation between the variable and share price, the variable is the net change in fair value of financial assets available for sale per share and net assets after the fair value of financial assets available for sale per share.This paper combines the accounting information relevance with reliability together under the fair value. The conclusion of theoretical analysis responses to the question of whether fair value information has reliability. Empirical conclusion also further validates its relevance. This paper suggests that relevance and reliability of the information should be further enhanced from guideline improving and environment perfecting, based on theoretical analysis and empirical research. We hope that the results might play an important role in the application of fair value in China.