Study On The Impact Of The Introduction Of Asset-liability View For Accounting Information Value Relevance

In July 25 2003, the Securities and Exchange Commission (SEC) submit a report to Congress, "Asset-liability view provides the most effective concept description for economic essence." Since then, asset-liability view has become the dominant earnings decision model replacing revenue-expense view. To achieve convergence with International Accounting Standards System, in 2006, China Ministry of Finance promulgated Enterprise Accounting Standard which has substantial and significant changes, that is asset-liability view has replaced revenue-expense view. This change reflects Chinese accounting standards setters has positive and open attitude in the realization of accounting information decision's usefulness. While does the introduction of asset-liability view in new Enterprise Accounting Standard have raised the value relevance of financial information? In this paper, the problem will be discussed. The first part of this paper points out the background, meanings of the study, research methods and innovations of this paper. The second part summarizes previous study from two aspects: value relevance of accounting information and the relationship between asset-liability view and value relevance of accounting information, and point outs what innovation should be made based on the existing research. The third part points out the theoretical basis, including the meaning of value relevance of accounting information, theory basis of studying value relevance of accounting information, the meaning of assets and liabilities view, the development history of earnings decision model and the expression of assets and liabilities view in new Enterprise Accounting Standard.Based on the theory analysis of the third part, the fourth part points out the four research hypotheses of this paper, Hypothesis 1: Impairment of assets has accounting information value relevance ; Hypothesis 2: Profit and loss from fair value changes has incremental value relevance of accounting information. Hypothesis 3: The influence of income tax accounting standards for net asset has incremental value relevance of accounting information. Hypothesis 4: The influence of income tax accounting standards for earnings per share has incremental value relevance of accounting information. Meanwhile in price model and asset liability model, operating profit margin is added as a new explanatory variable liabilities, in the same time company size and institutional investors'proportion is added as a new controlled variable, based on these the four models used in the paper was pointed out. The fifth part is empirical analysis, we draw a conclusion that impairment of assets,profit and loss from fair value changes and income tax accounting standards all have incremental value relevance through the descriptive statistics and regression analysis, that means that the four hypothesis assumptions is proved. It proves that the introduction of asset-liability view has increased the value relevance of financial information. The sixth part of this paper summarizes the main content of the paper and put forward relevant policy and suggestions, in the final, the study limitations and future research direction are pointed out.