China's Listed Companies Measured At Fair Value Accounting Information Useful Decision Making

Accounting measurement and the aim of accounting are closely connected. In the 1930s, after the economic crisis, the US Financial Accounting Standard Board (FASB) established the historical cost measurement under the commission responsibility view. Later on, the credit crisis initiated massive concern of fair value. In 2006, the FASB published the first and complete framework of measurement and disclosure ---"SFAS 157: Fair Value Measurement"--- based on the aim of decision usefulness. And then in 2008, the global economic crisis triggered a long dispute on the measurement of fair value. With the evolution of economic environment, fair value has experienced three phases which consisted of introduction, promotion, and innovation. During this particular period, questions like"Whether fair value is able to exhibit the actual condition of a business in a subjective, reliable, and sustainable manner, and to provide users with accounting information of decision usefulness?"were argued most. In 2006, China firstly employed both fair value and the aim of decision usefulness to the system with the publication of its new accounting standard. This action marked a new era of Chinese accounting system, and promoted researches on the measurement of fair value and decision usefulness of accounting information of listed firms in China.2007 and 2008 were two unusual years for Chinese stock market, during which it underwent the implementing of new accounting standard, the swift development of macro economy, as well as the turbulence caused by the global economic crisis. The present study analyzed and discussed the decision usefulness of fair value accounting information of Chinese listed firms in the active, organized market and the inactive, disorganized market respectively, from theoretical and financial levels. Moreover, this study also applied empirical analyses to the listed firms which hold trading financial assets both in Shanghai and Shenzhen stock markets by using price and return models. The results showed that, given the reliability of Chinese accounting information under global economic crisis, the fair value information of studied samples possessed significant value relation and information content. This study demonstrated that the implementing of new accounting standard improved the interpretation of accounting information to both stock price and abnormal return. It also drew a conclusion that the employment of fair value measurement to Chinese listed firms enhanced the decision usefulness of accounting information.