Research On The Fair Value Measurement’s Influence On The Executive Monetary Compensation Contracts

Ministry of Finance discreetly reintroduced fair-value measurement attribute on January 1st 2007. Then, on January 2014 Ministry of Finance elaborated the definition of fair value. At the same time, management performance appraisal method which is based on achievements has been widely used. Thus, How does the accounting performance caused by change of fair value influence the managers’ currency salary? Would the managers’ currency salary change along with accounting performance measured by fair value? Would the currency salary contract still valid? This study tries to answer those questions above.This study firstly reviewed the background of the related researches about influence of measurement of fair value. Then the study analyzed influence mechanism of accounting performance caused by the change of fair value. Based on this,we proposed our hypotheses. We chose financial data reveled of listed companies from 2011 to 2013 as our research sample. And we built salary-performance sensitivity model and viscous model. We used statistical software, such as SPSS17.0, EXCEL2007, to examine the influence of reintroduced fair value measurement on managers’ currency salary of Chinese listed companies.The results showed that(1) managers’ currency salary of Chinese non-financial listed companies is viscous. corporate shareholders regard the accounting performance measured by fair value as the part of corporate performance, while neglect the decrease of accounting performance measured by fair value. This leads to the positive promoting relationship between managers’ currency salary and corporate performance;(2) managers’ currency salary are more influenced by the accounting performance measured by fair value than other revenue reserves. And it means that corporate shareholders are lack of consideration when make the managers’ currency salary short-term contract.