Study On The Relationship Between Fair Value And Share Price Fluctuations Of Listed Company

The U.S sub-prime mortgage crisis in2007quickly become financial stormwhich sweep across the global economy, many critics argue that fair value accountinghas significantly contributed to the financial crisis and it is because of the shortage ofthe fair value measurement itself that America’s sub-prime crisis quickly spread toother countries around the world. Accusations and abuses about fair valuemeasurement continued. Fair value is regarded as the main reason that enterprise wentbankrupt, stock market declined and the crisis deepened. In the face of the socialquestion to fair value measurement, many governments modify its accountingstandards rapidly.In this case, we need to study that whether fair value is really relative with thelisted company’s share price fluctuations. The paper starts with the conception of fairvalue. Then it gives a detailed description of the fair value and capital market theoryof the mechanism and fair value measurement in our application process. The fourthchapter begins with the empirical analysis between fair value and the share pricefluctuations and takes domestic capital market from2007to2010as the researchbackground. We set listed companies that changes in the fair value loss is not zero asresearch objects and confirm the basic assumptions of correctly or not by constructinga regression model. We try to give evidence that whether fair value playsamplification role in the economic fluctuation and give appropriate suggestions on thebasis of research.The study found that the fair value loss has influence on share price fluctuation,with the cycle effect, which named in the economic boom, fair value is the generatorof financial bubble; in the economic recession, fair value is the roll booster offinancial risk; when the market price rises, the profit changes in the fair value havemore influence than the loss changes in the fair value on the share price fluctuation;when the market price declines, the loss changes in the fair value have more influencethan the income changes in the fair value on the share price fluctuation; the influencebetween fair value loss and share price fluctuation will become more powerful withthe increase that fair value loss accounted for the proportion of the net profit of theabsolute value. Therefore, our country should use fair value under the background ofinternational convergence, consider our national conditions and ensure the reliabilityof the premise, implement fair value measurement in an appropriate form.