The Study On The Relationship Between Fair Value And Accounting Conservatism

Fair Value is the international accounting research hotspot at present.And Accounting Conservatism is one of the qualitative characteristics of accounting information adopted in long term.The generations of both are close interrelated with uncertainty.However, their extents of reaction with uncertainty are totally different,thus the information provided on this base differs from each other.The article studies fair value' s influence on accounting conservatism.The article started with the relative literature reviews at first, which described fair value and accounting conservatism respectively,and then on the basis of economy environment' s uncertainty,illustrating the two relationships between uncertainty and fair value and conservatism in accounting.The result of their relationships turned out to be that conservatism is unilateral asymmetric reflect to uncertainty,but fair value shows bilateral asymmetric reflect.Secondly,the article compared the conservatism and fair value,based on their differences in accounting objective and qualitative characteristics of accounting information,and discussing fair value' s correction function to accounting conservatism, owing to request of accounting objective and reflection degree to uncertainty.The author,in the end,combining with 2007 new accounting standards adoption,carried out empirical study on fair value' s correction function to accounting conservatism,and illustrating the reason of different results between empirical study and theoretical analysis.In theoretical,the fair value corrects unilateral asymmetric reflect of accounting conservatism,however during empirical research,the author discovers when the accounting standards force to adopt fair value,the correction function is obvious,otherwise,the function turns to be weak. On the basis of differences in empirical study,the article analyses the main cause is difficulty to operate fair value.Moreover,the fair value' s correction function to accounting conservatism still needs to develop,because of new introduced in China.To conclude,the author provides the improvements to adopt fair value and conservatism in China currently.