An Empirical Study Of Fair Value’s Influences On The Performance Of Commercial Banks

Within a long time, when we looked through the United States subprime mortgage crisis in2007, that incident brought the most serious consequences in nearly one century of the global finance, a number of qualified business investment banks broke up. The fair value measurement method in the accounting standards had been considered accountably to lead to the crisis by many academics. That further analysis pointed out that the fair value measurement method increased value reflection in the relevant financial instrument on the market. When the market declined, the value of assets would be underestimated, when rising market as a whole, its value would be overestimated. This effect made the fair value measurement become a magnifying glass, regardless of bad or good, consequences had enlarged. When the market pricing function does not work, the fair value measurement would force assets loose the real value, eventually make net profit and the performance index sharply fluctuated. Unfortunately the sharply fluctuations did not due to company’s mismanagement, but external market investors did not know the reason. To stop their loss, investors largely sold stocks, which this behavior would increase the fall of stock prices, then stock prices fall into another vicious circle. The adverse consequence of the outbreak of the financial crisis has extended for several years. Even now, the United States economy is still not turning around. The practice of financial circle has taken more concerned about in the performance of the financial sector, the research of the fair value has become today’s hot issue on the financial sector.Many countries have brought fair value accounting method into their accounting standards and the Ministry of China has also put fair value accounting in new accounting standards in2007. The Ministry has officially released the new accounting standards on February15,2006, including one basic guideline and38of the new accounting standards, mainly for accounting report of listed companies. The implementation of this principle to the accounting practice in China has brought new opportunities and challenges. The impact on Chinese commercial banks is also important. The implementation of fair value accounting in our country is another important change. New standards take the fair value accounting standards into accounting measurement property, assets and liabilities are established in accordance with fair and voluntary trade. The application of fair value measurement in19of the new accounting standards embodies in specific guidelines, such as the recognition and measurement of financial instruments, real estate, debt restructuring, non-monetary asset exchanges and merged. According to Statistics, the international accounting standard Board (IASB) has explained the reference to fair value in the large proportion in relevant standards. Naturally, this choice of putting fair value measurement into new accounting standards in China is an important step to promote the internationalization of Chinese economic development. And the implementation of fair value measurement mode is bounded to have an important impact on the performance of commercial banks.This article was divided into five parts:the first chapter was a brief description of the study on the background and significance of this article, research methods and frameworks; the second chapter introduced the confirmation and measurement of fair value and its meaning as well as its relationship with other measurement, and the literature review of the research situation at home and abroad.; the third chapter had analyzed the volatility of the fair value measurement of performance of Chinese commercial banks and the capital market theory of stock price effects; the4th chapter was mainly about empirical analysis. Based on the financial data of listed banks in2007-2011, through descriptive statistical analysis and Panel data model, we would focus on the relationship of fluctuation in fair value between fluctuation of banks’profits and the earning of stock prices; The5th chapter gave some suggestions in the current fair value measurement mode to provide an experience for further theory research.