Empirical Study On The Fair Value Measurement’s Influence On The Executive Compensation Contracts

The Accounting Standards for Business Enterprises (2006) has been issued for more than five years, one of the biggest characteristic is the introducement of fair value measurement. But effected by market level, accounting practitioners’quality, corporate governance structure characteristics and other factors, the practice of fair value although has its limits, and the academic circle’s argument about the fair value measurement’s complex economic consequences has never stopped:whether the use of fair value will reduce the reliability of accounting information? Whether the use of fair value can realize the "decision-making availability" of accounting information and can evaluate "accountability" better?Enterprise is not a complete contract, the contractors achieve their utility through investing their resources and cooperating mutually. As a new kind of measurement, fair value should play a positive role in maintaining contract fair and improving contract efficiency. So when studying the fair value measurement’s economic consequences, contract is a so important perspective that should not be ignored. Executive compensation contracts is an important tool and is aimed to solve agency problems between the shareholders and managers, good executive compensation contracts can effectively use available information to measure level of senior executive’s energy and efforts. Therefore, under the background of fair value measurement being introduced in2006by Ministry of Finance, thorough research on the fair value measurement’s influence of executive compensation contracts has a profound theoretical and realistic significance.This article selects companies surviving before and after the issue of Accounting Standards for Business Enterprises (2006) in2005-2010as sample, and develops a regression model to research and analysis the structure and the utility of the executive compensation contracts from the following several aspects:fair value measurement’s effect on the executive compensation contracts, different influence of enterprises with different salary structure, different influence of enterprises with different nature of actual controller.According to a detailed study about structure of the executive compensation contracts, the implementation of equity incentive can improve the effectiveness of the executive compensation contracts, and finally helps to improve the company value. Considering the influence of nature of actual controller, this paper found that for listed companies under government control or nongovernmental control, the introduction of the fair value’s influence on the executive compensation contracts has no significant difference, this suggests that listed companies under government control has also payed more and more attention to the use of the information, and payed more and more attention to the management efficiency. Finally, according to the empirical research conclusion, related suggestions of improving the fair value measurement system and the structure of executive compensation contracts are put forward, and the limitations of the study and further research area are pointed out.