Study On Contractual Motivations Of The Classification Of Financial Assets

Watts and Zimmerman proposed the famous three contract accounting policy choice motivation assumption, created new areas of empirical accounting, In this empirical accounting theory, corporate management’s accounting policy choice motive of concern, become the hot issues of domestic and foreign scholars. In2006, China promulgated the new accounting standards, including "Accounting Standards for Enterprises No.22-Financial Instruments Recognition and Measurement", financial assets are classified into four categories, and introduced fair value measurement attribute. However, Accounting Standards for the management of financial assets held by the purpose and intent as a basis for classification of financial assets, the purpose and intent of a person’s subjective factors, easily manipulated, resulting in the classification boundaries of the financial assets of listed companies is difficult to determine objectively, giving the corporate to use financial assets are classified to manipulate profits to provide a new space. As a result, the classification of financial assets, whether it is fair expression of management intent or out of earnings management, motivation, has become a much-needed research topic. For these reasons, this article adopts the method of combining normative and empirical analysis, to explore China’s listed companies in the classification of its financial assets behind the contract motives.Firstly, the article reviewed and analysis of the contract theory and related literature, and adopted the "Accounting Standards for Enterprises No.22-Financial Instruments Recognition and Measurement" financial assets relevant provisions of the analysis, focusing on analysis of the use of fair value for subsequent measurement of financial assets held for trading and available-for-sale financial assets on corporate profits, economic consequences, based on the2007-2010four fiscal year in the Shanghai Stock Exchange A-share listed companies’ annual reports only on this basis, the disclosure of trading financial assets one of the company and available for sale financial assets, the study sample, using independent samples t-test and Logistic regression methods such as empirical analysis of listed companies in financial assets are classified contract motives, the results show that China’s enterprises during the choice of the classification of financial assets there is certain contractual motivation. Specifically:1. A political cost of enterprise financial assets classification has a significant impact on firm size, the more likely financialassets classified as available for sale financial assets.2. Compensation contract has a certain impact on enterprise financial assets classification, but due to the impact of the macroeconomic situation, the inconsistencies in each year. Specifically:①For the corporate executive compensation linked to performance, the stock market rose sharply in2007, tend to the classification of its financial assets for trading financial assets, in order to obtain bonuses; relatively stable economic situation in the financial crisis tend to financial assets classified as available for sale financial assets, store profits.②For management-owned enterprises, the stock market rose sharply in2007, in favor of financial assets classified as available for sale financial assets; But in the rest of the year, did not show a significant effect.3. Debt covenants with certain financial assets are classified in listed companies, but in each year showing the inconsistency, and the macroeconomic situation. Specifically:the financial crisis, the corporate existence of the repayment pressure, when the economy started to recover in2009, in order to store profits, enterprises tend to balance the high rate of financial assets classified as available for sale financial assets; other years the impact was not significant.4. Financial assets significantly affect the classification of financial assets, financial assets to total assets greater the proportion of enterprises more likely to financial assets classified as available for sale financial assets.