The Research Of The Value-Relevance Of Accounting Information Under Fair Value Measurement

The globalization of the economy and the mutual influence of international capital market are becoming the propensity of the development of the world's economy. From Chinese perspective, factors such as the changing of the economy, developing of the capital market and the similarity of accounting principles between China and IAS have become the power of the changing accounting environment. In 2007, the Ministry of Finance promoted the new GAAP in China which was a significant change and adjustment for Chinese accounting system. One important issue is that the new GAAP introduced fair value accounting model which shows the tendency of international convergence.In 2008, a subprime crisis originated from USA becomes world-wide. The nature of fair value model becomes the focus again. People have fierce discussion on whether the fair value deteriorates the crisis and if it is worth modifying. The banking industry in USA thought fair value principle deteriorates the subprime crisis, but this opinion was denied by accountancy. This empirical study is based on Chinese capital market and provides support to this argument, making clear of the fair value model.Under this background, the implications of this study can be concluded in three ways:First of all, under the international financial crisis, people may think that the fair value measurement causes the crisis intensive. The confidence of using such measurement attribute has been wavered. In this context, the author uses the data of the Chinese a-shares company to make an empirical analysis that briefly answer the question of "whether the fair value makes the financial crisis intensifies?"Secondly, from the macroscopic level, this topic talks about practical environment since the new accounting standards has just been promoted, which can be only implemented in listed firms. Therefore this research can provide theoretical basis for the implementation of fair value measurement in new standards, and also provide support data and empirical analysis for the implementation effects. According to the empirical results, policy may be recommended for the improvement of the fair value measurement system.Then from the microcosmic level, this study can eliminate doubts that encompassed people, and make them feel confidence when using fair value measurement attribute in China. With this research, author hope the barriers of using fair value will be erased, and also test the investors behavior on the capital market which can be a further guidance of them.This paper has the following six parts,Ⅰ. Introduction of background.Ⅱ. A retrospect of the relevance of the value of accounting information under fair value measurement.Ⅲ. The related theories of the relevance of the value of accounting information under fair value measurement.Ⅳ. The designing of the empirical study.Ⅴ. The research of issues under descriptive statistic and the empirical results.Ⅵ. A conclusion of this study.This paper did a research on the relevance among gain/loss on fair value change in income statement, the fair value change that directly heads into shareholder equity, the corporate share price as well as the yields on this security.Through this empirical study, we conclude the adoption of fair value increases the relevance of accounting information to some extent. In conclusion, we could see that the introduction of fair value measurement model is not a rush convergence, it fits the Chinese accounting environment. This study could provide support to the decision maker of GAAP on the introduction of fair value measurement model in a long run.Because of the various limitation of the author of this paper, there are several areas in this paper need deeper research and further discussion such as the limited access to data. I believe that with the development of Chinese market, researchers could access to more comprehensive data in the capital market thus develop the study in this area in a more detailed way.