The Study On The Value-relevance Of Financial Assets' Fair Value

While International financial crisis is sweeping the globe, fair value, always considered as an edge tool against the financial risks, is coming into focus, however, various stakeholders have different opinions on it, which are critically-acclaimed. As to the financial crisis, FASB and IASB adopted corresponding measures rapidly, including measuring the financial instruments, disclosing and publicizing the expert group reports, amending the grade of fair value to improve the measurement of fair value, recessing the requirements of reclassifying financial assets, and so on. In China, however, we've just widely introduced fair value to measure financial assets for two years, only to give rise to doubts about the reliability and relevance of fair value of financial assets.Against the background, this paper, by testing the value relevance of information on fair value of financial assets belonging to China's A share listed companies in 2007 and 2008, studies the value relevance of information on fair value of financial assets under different economic circumstances, and the fact that if investors are concerned about the extent of disclosing the information of financial assets. The results show that, in the environment of financial crisis, the information of fair value of financial assets is still relevant, but the explanation is weaker than normal years. Meanwhile, investors pay much attention, in the financial report, to the disclosures of the fair value of financial in detail. Therefore, whatever economic environment it is, for financial assets, adopting the measurement of fair value could improve decision-making relevance of accounting information.Fair value is widely questioned at this time, however, the results of this paper can dispel the doubts about the practice of fair value in the measurement of financial assets, and also provide empirical supports for standard-setters. However, there are still hidden dangers in the application of Chinese accounting standards, hence, regarding the fact that how to use fair value perfectly to measure financial assets, the author puts forward some corresponding countermeasures and suggestions in the end.