The Study On The Relationship Between Fair Value Pricing And Earnings Quality Of Bank

On January 1, 2007, the fair-value accounting standard implemented in the listed companies. The introduction of fair value standards caused a lot of controversy in our country. Many insiders believe that the use of fair value will have a tremendous impact on the earnings quality of banking. The reason is that there are lots of monetary items in banks, involving many recognition and accounting of financial instruments, all of these need to use fair value pricing. So, the fair value pricing will have an impact on the banks'earnings, which is the result of fair value pricing reflected in the final earnings quality of banks. Most scholars both at home and abroad, studied fair value pricing or earnings quality, there are also parts of them working on the study of the relationship between them. However, few of them studied in the form of case. In view of this, the writer will adopt case analysis method and take Bank of China as the research object to analyze the relationship between fair value pricing and earnings quality in unique perspective. Firstly, the author analyze the current situation of the fair value using in banking, this is the theory and reality basis of case analysis.Then the author constructs earnings quality evaluation system of BOC and do index analysis of statement data in nearly five years, so that to examine the influence degree of fair value pricing. Finally the author will put forward some suggestions. Structure of paper as follows:Part 1: Introduction. This part introduces the research background, research significance, research methodology, writing thinking and so on.Part 2: Analysis about the situation that fair value pricing using in banking. The writer expounds the application of fair value in banking, relevance and reliability issues, and combining domestic and foreign literature about the impact of the banking because of using fair value pricing.Part 3: Basic information of the Bank of China. The writer introduces the development of Bank of China, main business performance in recent years and financial index.Part 4: Construction of earnings quality evaluation system of BOC. The writer expounds the concept of earnings quality, influence factors and evaluation methods, and accordingly designs the applicable earnings quality evaluation system to Bank of China.Part 5: Earnings quality evaluation of Bank of China based on fair value pricing. On the basis of front context, this part chooses the public financial reports from 2005 to 2009 to calculate the index, compares and analyses the change of BOC's earnings quality before and after the applying of fair value and the influence degree because of fair value's using in banking.Part 6: The author puts forward the suggestions to improve earnings quality of Bank of China .