The Impact Of Accounting Information Content Of The Fair Value On The Financial Listed Companies

The fair value measurement attribute as a formal introduction of accounting standards is a bright spot in the new guidelines issued by Ministry of Finance in 2006. As the fair value has a higher relevence than the historical cost,the preparation of the financial report in the fair value measurement method should provide more useful information.The No.22"Financial Instruments Recognition and Measurement", No.23"Financial Asset Transfers",No.24"Hedging"and No.37 "Presentation of Financial Instruments" of the Enterprise Accounting Standards are closely related with the finance. The proportion of denominated assets measured by the fair value in the financial listed companies are larger than the other sectors.The impact of the fair value on Chinese finance industry is generally a matter of concern.It also becomes a hot issue to research scholars at home and abroad.Foreign scholars started to study the fair value earlierly and has made a lot of results.Our use of fair value was in a shorter time.The research was less,especially in the field of empirical study.With the promulgation and implementation of new guidelines,the relevant norms should be continuously enriched and the empirical research should be implemented.The purpose of this article is to inspect the fair value of accounting information content of the financial listed companies based on the analysis of existing literatures.Use the data from the new guidelines and the empirical analysis method.Expect to propose the sound policy recommendations to optimize the use of the fair value.This study used both of qualitative and quantitative research method. Propose the research intention through the theoretical analysis of the fair value and the accounting information content.Then start the multiple linear regression for quantitalive study used the pricing model and revenue model. After obtaining the regression results, the qualitative research started. Then conclude the article,put forward views and suggestions of this article. This paper contains five chapters.In the first chapter,this paper introducted the research background and significance,research methodology and framework,article feature,contributions and limitations.In background of Chinese rapid economic development,strengthened international cooperation and financial instruments emerging,the fair value was officially introduced to our new business accounting standards.The U,S economic crisis fully exposed the existance of the big risks of the application of the fair value.In the process that we practically applicate the fair value,what kind of consequences will cause arid how to take appropriate measures to avoid the negative result is the intention of this article. The particularities in the sample time and the choice of research subjects as well as the adjustion of Ohlson model,Easton and Harris model according to the purpose of this paper were the features of this article.However,Chinese financial listed companies are still relatively small in number,resulting in limited sample data.Chapter 2 is the theoretical foundation and literature review section of this article In the part of the theoretical basis this article firstly descripted the relevant theory of the fair value and accounting information content,clarify the relationship between the two.Then introduced the development and changes in fair value guidelines for the empirical part of this article to do a god job foreshadowing the theory. The literature-review part firstly reviewed the fair value of foreign scholars on the impact of accounting information on the research results.Listed the contributions of domestic and foreign scholars in the fields of normative and empirical areas and different direction in these areas.They all showed that compared with the historical cost measurement method the fair value measurement method has more information content,that is,incremental information content. Although there are many research in our contry,most are normative research.There is much room for development in the field of the empirical research. The fair value influences the financial listed companies most. Our scholars take the entire capital market listed company or simply listed banks as a research subject without taking into account the impact of securities,insurance and other non-bank financial listed company.So we need to put these subjects into the empirical research.Otherwise it takes a short time for application of the new guidelines.In the past scholars mostly used the sample data which was before the implementation of the guidelines in related fields of empirical study,or specialized the difference of the fair value between the before and after the turn of the old and new guidelines.There are very little relevant results for the fair value of the empirical research under the new guidlines.Therefore,the impact of the fair value to the accounting information content of the financial listed companies was the goal of this article.It begun to enter the main body of this paper in chapter 3,namely,empirical part.Selected the 2006-2008 A-share financial listed company and the annual report published data during this period as a study.Excluding incomplete data samples,got 25 samples of companies,a total of 75 sets of data. Through the use of revised pricing model and revenue model,with the actual situation in our country this paper empirically tested the impact of the accounting information content of fair value on listed companies. This article broke down the book value of equity in two parts as the equity of changes in the fair value of available for sale financial assets and the equity in addition to the changes in the fair value of available for sale financial assetsd.Broke down the net profit into the net changes in fair value gains and losses and the net changes in-addition to changes in fair value gains and losses.Use the adjusted price model and revenue model to study the value relevance of stock prices for various parts.Therefore,there are two parts of the fair value in this article.One part is the amount of change in fair value included in "fair value changes in profit and loss".This part contains financial assets and financial liabilities which are measured at fair value and the changes included in current profit and loss(including trading financial assets and financial assets,or financial liabilities which are directly designated and measured at fair value and the changes included in current profit and loss),and the investment real estate which are measured by the fair value measurement model.The other part is the amount of changes in fair value included in "Capital reserve-available for sale financial assets,net changes in fair value" which arises from changes in fair value of available for sale financial assets.Chapter 4 is the empirical tests based on the study of chapter 3 which respectively made:the regression analysis for the five model. First,in the price model the value correlation of financial assets and financial liabilities which are measured at fair value and the changes included in current profit and loss to stock price was not significant while the changes of fair value of available for sale financial assets had significant correlation with the value of share.That is to say the impact of changes in the fair value of available for sale financial assets on stock price is much larger than the changes in the fair value included in "fair value changes in profit and loss" on stock price.In addition,there was higher significance of net assets which were adjusted by the fair value than the net assets without adjustment.It also shows that the'available for sale financial assets adjusted by fair value increased the relevance to net asset through adjusting the net asset.Second,in the revenue model,net income per share,annual change of net income per share had a significant positive correlation with the stock returns,indicating the higher accounting earnings,the higher the stock returns.The greater positive changes in the accounting earnings,the. higher the stock returns.However,the impact of the changes in fair value per share included in "fair value changes in profit and loss"and changes in fair value of available for sale financial assets on stock returns was not significant.Third,the.net revenue in the revenue modelssociated with the stock price more than the price model.The net revenue before adjusted by fair value and annual changes of net revenue which were divided by the stock price all had significant value relevance.And the stock value relevance of the changes in fair value per share included in "fair value changes in profit and loss"and changes of available for sale financial assets at fair value per share was somewhat lower than it in the price model.On the whole,this paper reached the following conclusions through the empirical analysis:the:fair value had a significant value relevance to the stock price.The fair value pricing can improve the financial accounting information content of listed companies.Finally,propose the conclusions of this article,summarized the paper,and make meaningful policy recommendations to the relevant laws and regulations.Propose to establish a sound market system active,continuously improve and develop guidelines for the fair value and its measurement methods,strength supervision to prevent the phenomenon of earnings manipulation.The main characteristics of this paper are that,first,this object of study in time and space are more in line with the ues of fair value in our country, and more extensive.In time,apply the data of new accounting standards to empirically analyze the impact of fair value.In space,the object of study include banking listed companies and non-bank financial listed companies. The scope was more comprehensive and more universal.Able to reflect the use of the fair value of the financial industry as a whole.Second, these models are based on Ohlson residual income model,Easton and Harris returns models which after compensation adjustment come more focused,more in line with the purpose of this research.The main contribution of this paper is that through the empirical analysis it showed that the fair value can improve the accounting informationg content of financial listed companies. The information content was mainly from the fair value of available for sale financial assets.Test results showed that the fair value of available for sale financial assets had a significant relevance to the stock price while the fair value included in "fair value changes in profit and loss" associated with no significant effect on stock prices.Both of the fair value changes of available for sale financial assets and fair value changes included in "fair value changes in profit and loss"had no significant effect on the stock returns.As the new guidelines have been using in a shorter time in our country and the number of financial companies is also very limited, the data has significant limitations in the number of years and individuals.This is one of the inadequacies of this article.In addition,our capital market is not yet very mature and perfect,It did not fully meet the requirements of an efficient market. So the findings of this article can only to some extent reflect the results of the application of the fair value of financial guidelines for our listed companies.Believe that in future studies,with the number of years using the new guidelines and the number of financial listed companies increasing, there will be more and more relevant empirical researches.And the findings will be more and more valuable.