The Empirical Research On The Relevance Of Fair Value Measurement And Enterprise Value

With the development of the capitalism market in China as well as in the convergencecontext of China’s accounting standards with the international one, in2006the China’sMinistry of Finance issued the new accounting standards system, including1basicstandard together with38specific guidelines, and requires all quoted companies toimplement it starting from January1st,2007. In the promulgation of the new accountingstandards, one of the key points is the use of fair value measurements. Whether the fairvalue of the measurement can improve enterprise value has raised intense debates not onlybetween the theoretical extent and practical extent of accounting, but also betweenaccounting standard setters and bank regulatory agencies. In particular, the financial crisiswhich swept the globe in2008has put this controversy to a new climax. The bankers whosuffered losses in the crisis think that the fair value exaggerates the losses of financialinstitutions and the level of financial risks, and therefore they strongly urge the suspensionor termination of the use of fair value. But the accounting profession deem that themeasurement attributes of fair value can increase the transparency of financial information,and provide the investors a clearer understanding of the development and the truth of thefinancial crisis, also helpful for the market regulators to recognize the severity of thefinancial crisis, thereby determine the priority to rescue financial institutions, as a resultthey strongly denied that fair value is the trigger that set off the current financial crisis andpropose to continue the use of fair value. Within such context, using the method ofcombining normative research and empirical research, in this paper we study specificallythe correlation between accounting information and enterprise value under the fair valuemeasurement attributes.The dissertation first reviews the correlation between accounting information andenterprise value. And then we discuss the concepts and basic theories, and we list therelevant data for the2007-2011, we use modified price model for empirical analysis, heconclusion of this dissertation is that there is a positive correlation between stock price andgains and losses of fair value change per share and net changes in fair value of availablefor-sale financial assets per share, and its regression coefficient is significantly different from zero. It suggests that since the carry out of China’s new accounting standards, apositive correlation is shown between the information of fair value and enterprise value,namely the use of fair value measurement attributes can improve the enterprise value.