The Research On Fair Value Measurement And Its Economic Consequences

Recently, Fair value measurement has been the most challenging hot topics of accounting in most countries. Both FASB and IASB are under the procession of introducing the concept of the fair value measurement into the GAAP now. FASB issued SFAS NO.157, established a framework for measuring fair value, which significantly improved the reliability and the operability of the fair value measurement. Our country introduced the theory of fair value measurement later than the other countries did. Nevertheless, there exist twists and turns in the propaganda for the introducing of the fair value accounting. In order to strengthen harmonization and convergence between Chinese Accounting Standards and International Financial Reporting Standards (IFRSs), Accounting Standard for Business Enterprises promulgated in 2006 by Chinese Ministry of Finance adopted fair value measurement on a large scale, which deeply affected both theory and practice of financial accounting in our country.Thus, this dissertation firstly compares the newest definitions of fair value made by the different standard setters and discusses the relevance and the difference between fair value measurement and the other measurements. In my opinion, fair value measurement attribute is a level higher than the other measurement attributes, and it is a compound measurement attribute. After analyzing the four characteristics of the fair value measurements-fair , dynamic, decision-making relevant, and estimative, this dissertation discusses the theory of the economic consequences. Then, this dissertation introduces the latest breakthroughs-fair value measurement method and fair value hierarchy in SFAS157, which make fair value measurement apply more convenient and provide a solution for the reliability issues.After reviewing the three stages of applying fair value measurement in our country, the dissertation focused on the economic consequences about fair value measurement applying in three standards -the Accounting Standard for Business Enterprises No.3 Investment Real Estates, No.12 Debt Restructuring and No.22 Recognition and measurement of financial instruments. This dissertation holds that fair value measurement will have far-reaching effects on the financial position and operating results, thereby affecting the enterprise management's decision-making, and eventually impacts the investors' economic decision-making by reading accounting information of the financial report. It also made a positive test of the fair value accounting information to investors in investment decisions. Finally, the dissertation brings about the corresponding policy recommendations on the basis of the above theoretical analysis and empirical results.