Research On Value Relevance Of Long-lived Asset Impairments

In order to adapt to the demand for high quality accounting information on the development of market economy in our country, enterprise towards the world market and the convergence trend of international accounting standards, the current accounting standard arises at the historic moment to serve China’s current accounting environment.The development of asset impairment accounting standards is a miniature of our country’s accounting standards reform process. The implementation effect of asset impairment accounting standards to some extent reflects the implementation of accounting standards in our country. The aim of assets impairment accounting is by providing information of assets value, providing information to the reality and potential investors with future cash inflows or outflows of relevant information. Current asset impairment accounting standards (short for CAS8) draws on the approach of FASB and the IASB, using a single standard to regulate long-term asset impairment problems, unified the policy,the judgment criteria and thoughts adopted on dealing with the long-term assets impairment, more detailed standards are made in such aspects as recognition, measurement and disclosure, every effort is made to provide more real and useful information to accounting information user. But in the terms of if long-term assets impairment can reverse there exists significant difference between CAS8and the international accounting standards, international accounting standards allow reverse of asset impairment losses and with a detailed rules, but CAS8specified upon confirmation that once long-term assets impairment loss, reverse can not be made in the future accounting periods.However, the promulgation and implementation of the rule caused disputes and discussion in theory research and practice research.Combining with the actual situation in our country, this paper is aimed to study whether the promulgation of the asset impairment criteria to improve the quality of the long-term assets impairment accounting information and improve its value relevance, to provide theoretical support and empirical evidence.This article combines normative research with empirical research, normative theoretical analysis provides a theoretical basis for the empirical test, empirical test provides data and empirical support for normative research. Based on the related analysis of value relevance theory and the theory of asset impairment, providing theory support for the subsequent empirical research, and then use long-term assets impairment data of listed companies before and after the change of accounting standards,to study the relation of long-term asset impairment standards and value relevance of empirical from the investor’s position. Considering the consistency of accounting standards, I selects2002-2006and2007to2011the two stages of the annual report of Shanghai and Shenzhen A-share manufacturing data as sample respectively, using descriptive statistics and price model to study the influence of the change of long-term assets impairment standards on value relevance, and compensation model is adopted to improve the robustness test. According to the theoretical analysis and empirical test, this paper get the following conclusion: Manufacturing listed companies’accounting information has higher value relevance after the provision for impairment of long-term assets than before the provision for impairment; Under current accounting standards, accounting information provided by the provision for impairment of long-term assets after the rule change has significant incremental value relevance than before; Under current accounting standards, the contribution to improve the value relevance of provision for asset impairment of the BV information is not more than EPS information. In this paper, the main research contents are arranged as follows:The first part, introduction. This part firstly introduces the research background, research significance, and then detailed elaborates the research methods and main research content this article used. Finally, after introducing the relevant framework, putting forward the innovations and shortcomings of this paper.The second part, the literature review. This part is a review of the literature research at domestic and abroad, summarizes the status of research on value relevance and asset impairment at domestic and abroad, and points out the deficiency of existing research, provide the basis of this study.The third part, define the relevant concepts. Based on the value relevance theory and the theory of related asset impairment analysis, this part provides theory support for the subsequent empirical research. The purpose of value relevance research is to evaluate comprehensive quality on the relevance and reliability of accounting information. Mainly on value relevance, decision-making useful concept, efficient market hypothesis theory and asset impairment value relevance concept definition.The forth and fifth part, mainly introduces the research design and empirical results in this paper. This is the focus of the full text. This section describes the research hypothesis and research model building, the sources of study data, sample selection, sample descriptive characteristics. According to research models, research methods and empirical analysis presented the results. This part uses the compensation model at the same time on robustness test of asset impairment information value relevance, in order to further prove the conclusions are true and correct.The sixth part, according to the results of the study, this part puts forward to the suggestions of perfecting asset impairment criteria, fully combined with the specific situation of the capital market in China, in view of the current accounting standards itself and the existing environment problems.