Research On The Influence Of Voluntary Accounting Policy Changes On Enterprise's Value And Interests Allocation Between Contracting Parties

Accounting policy is the specific principle followed by the enterprises as well as it is the specific accounting approaches adopted by the enterprises. In other words, it is the regulations of principles and approaches followed by the enterprises while they are processing and providing the accounting information. Because the accounting information is the foundation of the parties entering into business contracts as well as it is the compact components and the important tools to oversee the implementation of contracts and assess its results, so the voluntary accounting policy changes taken by the enterprises are bound to change the foundation of contracts establishment and implementation. Based on the above considerations, this paper respectively employs Feltham-Ohlson Model and Client-Agent Model to analyze the influence of voluntary accounting policy changes on enterprise's value and interests allocation between contracting parties.Based on Feltham-Ohlson Model, this paper firstly sets up an analyzing model that enterprise value is evolved with time(from Period t to Period t+1), and discusses the influence of voluntary accounting policy changes on enterprise's value in general and on the condition of refinancing constraints respectively. Then based on Client-Agent Model, this paper sets another model that deals with the influence of voluntary accounting policy changes on interests allocation of shareholders and managers in general and on the condition of refinancing constraints, and makes some analysis and discussion about the model. At last, it comes to these conclusions. First, Without the refinancing constraints, voluntary accounting policy changes will not change the enterprise's value. Under this circumstance, voluntary accounting policy of increasing enterprise's earnings will raise the manager's earnings and cause damage to the shareholders'profits, while voluntary accounting policy of decreasing enterprise's earnings will drop the manager's earnings and the shareholders will get benefits from it. Second, whether the enterprise will change the voluntary accounting policy or not, enterprise's value will decrease which will decline the manager's and shareholders'earnings simultaneously if there are refinancing constraints. Third, on the condition of refinancing constraints, that the enterprise adopts the voluntary accounting policy of decreasing current earnings will increase the enterprise's value, but it cannot recover to the same state of none-financing constraints. Under this circumstance, the shareholders'...