Fair Value Accounting And Investors Protection

With the volatility of the economy and society, the uncertainty investors facewhile making decisions increases, which puts forward higher requirements ofaccounting system. On the basis of value and the concept of present value, fair-valueaccounting, featuring in facing risks, uncertainties, markets, the present as well as thefuture has replaced the accounting model of historical cost and becomes the mainaccounting model in21stcentury. Fair-value accounting can protect investorsnaturally.This paper gives an analysis of fair-value accounting’s function in investorsprotection from both demand and supply after study on domestic and foreign research,by taking the uncertainty in the market environment and usefulness of makingdecisions in accounting as the main breakthrough point. This paper draws someconclusions: firstly, fair-value accounting and investors protection interactive witheach other. The effect of fair-value accounting is to enhance the quality of accountinginformation available for investors, meanwhile, investors protection pushes the fullapplication of fair value accounting; Secondly, fair-value accounting plays functionsof pricing and governance in the two phases investors make decisions, respectively.Thirdly, the fair-value accounting can protect investors’ right to know,decision-making and right to yields.This paper is innovative in research content and perspective: Firstly, by takingthe uncertainty in the market environment and usefulness of making decisions inaccounting as the main breakthrough point, this paper has a deduction of thefair-value accounting which is a logically consistent and coherent system; Secondly,after analysis from two aspects of demand and supply, this paper draws a coreconclusion that fair-value accounting is the inevitable choice to protect investors.Fair-value is an accounting measurement attributes widely used in the world, andthere is much room for improvement of fair-value’s application in our country. Furtherexpansion of fair-value in accounting standards and in practice in our country meetsthe demand of investors and our maturing market economy.