Research On The Value Relevance Of Fair Value Hierarchy Information

In September2006, the FASB re leased SFAS No.157accounting standards FairValue Measurements, which forma lly p ut forward Fair Va lue Hierarchy T heory. InMay2011, the IASB released IFRS13Fair Va lue Measure ments whic h changed thesituation where fa ir va lue scattered in several specific guidelines. In the context ofinternationa l converge nce of accounting standards, China’s M inistry of Financereleased No.39accounting standards Fair Va lue Measure ments, whic h narrowed thegap between the FASB and IASB in fa ir va lue accounting standards. Fair va luehierarchy information is help ful to relie ve the lack of re liab ility of fa ir va luemeasure ment attribute, which is the core of us ing fa ir value. Study ing the va luereleva nce of fa ir va lue hierarchy information has important significa nce on improvingfa ir va lue accounting standards and promoting better application of fair va luemeasure ment attribute.Based on the fa ir value hierarchy information of bank ing and ins urance industrylisted firms fro m2007to2012, this paper finds that assets in le vel1and le ve l2andliab ilities in all leve ls measured at fa ir value have va lue releva nce. However, assets inleve l3don’t have va lue re levance. With the decreasing o f the measure ment leve l,value re levance o f assets in leve l1, le ve l2, and le vel3is gradua lly decreased. Butliab ilities in all le vels ha ve no significa nt difference in va lue relevance. Whenanalyzing the va lue releva nce of fa ir va lue hierarchy in different informationenvironme nts, this paper makes the fo llowing conclus ions. Higher informationtransparency can enhance the value releva nce of fa ir va lue information in le vel3.Higher richness in information can only improve the value releva nce of assetinformatio n in le ve l3. And the poorer information enviro nment will weaken the va luereleva nce of fa ir va lue liabilit ies.Therefore, the fa ir value hierarchy informatio n has value re levance as a who le.However, China must further improve the fa ir value measure ment standards andguide lines and gradually establis h and improve various financ ia l instruments trad ingmarkets. China should also improve the professiona l judgme nt ab ility of accountingpersonne l and strengthe n the communication and cooperation between accounting andassessment fie ld. In addition, China must regulate the mechanis ms o f fa ir va lueinformatio n disc losure.