Study On The Value Relevance Of The Investment Real Estate Measured Through The Fair Value Pattern

In February 2006, China’s Ministry of Finance released a new system of accounting standards, which incorporates fair value measurements to accounting subjects including the rule of the investment real estate. The new standards to the follow-up measurement of the investment real estate can be measured through the cost pattern and the fair value pattern. At the beginning of the promulgation of the standards, fair value pattern was considered to be widely used in the field of investment real estate. Because in theory, fair value pattern which continue reflect the market value of real estate is more suitable. However, eight years have passed. According to the statistical data of the listed company financial report we can find that the listed companies adopting fair value pattern to measure investment real estate are few. In recent years, along with the continuously soaring price of our country real estate, using the fair value pattern for subsequent measurement of investment real estate can bring positive effect on the financial situation of enterprises. Why the fair value mode is not the favor of the listed corporations? The thesis is starting with the problems in practice, from the perspective of research on value relevance of accounting information to research and discussion on this issue.Based on the relevant theories and research of scholars domestic and overseas, this article discusses the reasons why the fair value pattern is not universally adopted by the empirical test model. This paper research on whether the value-relevance of accounting information is improved after adopting fair value pattern by using price model and incoming model based on the samples of listed companies employing fair value pattern to measure the real estate from 2007 to 2013.Results of the empirical test indicate that the use of fair value pattern has improved the value-relevance of accounting information in some degree. However, the investment real estate sound value change profit and loss has no significant impact on stock prices. This shows that the securities market will react to the changes of accounting policies which the fair value pattern is used to measure the investment real estate and reflect the stock price. Therefore, the introduction of fair value accounting system is inevitable for economic development. In the end, some corresponding strategies are proposed according to the discussion of the problems and the analysis of the empirical result, such as improving the fair value measurement system, standardizing the valuation methods and so on.