Research On The Impact Of The Application Of Fair Value In Financial Listed Companies

Since Jan1,2007the new accounting srandards has been applied in China’s listed company for more than six years, once again the introduction of fair value measurement is one of the biggest bright spot. On the one hand, the new accounting standards adapts to the objective requirements of market economy development in China, on the other hand, it is also in line with the development trend of the international accounting measurement. However, soon afterward the financial crisis has begun to break out in the United States, fair value measurement has been questioned. Therefore, it is particularly important to stand on the application effect of fair value and its impact on listed companies. Through empirical research, it will provide some empirical support for broader promation of the fair value measurement.In all industries, the financial industry is the most extensive use of fair value measurement, so it is typical. In this paper, on the basis of the analysis of the development course in China and related theories of fair value measurement, the author refers to the research achievements at home and broad, and selects a sample of twenty-six listed companies in Shanghai and Shenzhen stock exchange from2007to2011, analysis of the influence on fair value to company’s financial position and operating results. Through the establishment of pricing model to study the value correlation of fair value by using panel data. Then the author tests the value relevance of fair value information for banking and securities, insurance industry. Finally, by increasing company size and asset-liability ratio to verify the robustness of the above empirical results. According to the empirical research, we can draw the following conclusion:(1)Overall, the proportion of assets and liabilities measured in fair value in total assets and total liabilities is not bigger, the influence of changes in fair value on net assets and the influence of profit and losses on the changes in fair value on net profit is also lower, but there is a big difference among the companies.(2)From the empirical results we can see that, there is a significant association between net assets, net profit and the stock price, and the attention of investors to profit is higher than the attention to net assets. At the same time:net changes in fair value of available-for-sale financial assets is correlated with the stock price, gains and losses from changes in fair value is unirrelevant to the share price.(3)According to empirical analysis of two sub-sample in banking and securities, insurance industry:the changes in fair value of banking listed companies is not correlated with the share price; and there is value relevance between fair value information and the intrinsic value of stock in securities, insurance industry listing companies.(4)The result of robust test shows that the company size has an ability to explain the stock price, asset-liability ratio is not related to stock price. The changes in fair value and the intrinsic value of stock are relevant when two controlled variables are added.