The Effect Of Fair Value Measurement On The Institutional Investors' Decision-making

In 2006, Chinese Ministry of Finance promulgated a new Accounting Standard for Business Enterprises. Adopted the fair value measurement modestly is a major feature in the 2006 version. In 2007, the U.S. subprime mortgage crisis triggered a global financial crisis. Fair value measurement had been criticized as an accelerator of recession. To explore the truth, scholars made a great deal of discussion about fair value.In this context, the paper reviewed the historical development of fair value and introduced the relevant standard-setting and scholars' literature of fair value measurement. This paper expounded the current situation of fair value measurement and institutional investors in China, analyzed the relationship between fair value and Decision-Usefulness. Based on the fair value measurement is useful for investor, the paper tries to demonstrate the affect of fair value to institutional investors'decisions through the fact. The empirical results show that the fair value has impact on investment decisions of institutional investors but not very significant, institutional investors are optimistic about fair value measurements, assets and income measured with not-fair value measurement have influence on the shareholding of the institutional investors. It proved that HCA has not lost its role. It concludes that use fair value modestly is suitable for China. Further implementation of fair value should be concerned about the disclosure of risk estimates.