A Research On The Value-Relevance Of Fair Value

The development of capital market and the enhancement of the dispersing degree of the stockholders'rights have caused the accounting objectives to change from entrusting duty to providing helpful information for users to make resourceful decisions. Under the premise of the view of making useful decisions, clean surplus theory as well as the conclusions of empirical research urge information perspective to measurement perspective. This transformation demands constitutors to introduce fair value attribute to improve the value relevance of accounting information.From 1990s, fair value has evoked widespread discussion in developed countries such as USA. At present, fair value has become the first choice of measurement basic in GAAP and the International Accounting Standard; also it has been regarded as the main measurement attribute of the following measurement of financial instruments. Our country has been quite cautious to the exertion of fair value all the time, but in order to respond to the pressure caused by the entry to the World Trade Organization (WTO), our country's New Accounting Standards promulgated in 2006 has widely introduced the fair value concept under the background of accounting standards'international convergence. However, in the process of international convergence, enterprises in our country are different from other countries'and there is lack of related experience in the practice field. Under such situation, we need to discuss the suitability and the implementation effect of fair value in our country. To solve this problem, this paper conducts investigation by theoretical analysis and empirical research and the main conclusions are as follows:(1) Loss or profit from changes of fair value and changes of fair value of financial assets available-for-sale are both correlated with the stock price. These appearances suggest that the use of fair value in the new accounting standards has improved the value-relevance of accounting information in some degree.(2) The results of grouping inspection indicate that, the use of fair value in the new accounting standards has greatly enhanced the value-relevance of accounting information in companies whose net profits are positive and aren't special treated(ST) by China Securities Regulatory Commission(CSRC). However, when it refers to companies whose net profits are negative or are special treated (ST) by CSRC, there is no strong evidence of relationship between the use of fair value and the stock price.(3) The results of the robust test and the supplement examination using the reconciled statement of differences in shareholders'equity further suggest the use of fair value in the new accounting standards has enhanced the value-relevance of accounting information.(4) When it comes to the main control variables, circulation stock proportion and scale are both remarkably negatively related with the stock price, whereas institution investor's proportion is always remarkably positively related with the stock price.These findings can not only effectively eliminate people's anxiety to the zigzag utilization of fair value in our country, but also provide support in the view of empirical research to the standards'constitutors. So the results of this paper can impel the widespread application in some degree. However, the standards are only technique criterions producing accounting information, and there are a lot of problems in the practice. Therefore, I put forward some corresponding policy proposals on how to effectively implement the measurement pattern of fair value in our country at the end of this paper.