Research On The Value Relevance Of Fair Value Hierarchy Information

Ministry of Finance of the People's Republic of China released No.39 accounting standards Fair Value Measurements which formally put forward Fair Value Hierarchy Theory in early 2014.This accounting standards is in order to improve the measurement of fair value accounting information reliability and decision usefulness,and also tended to the same with international accounting standards.At this background the paper made an empirical analysis of the value relevance of Fair Value Hierarchy Informarion in order to provide empirical evidence to the application of CAS No.39 by using the normative research method and the empirical research method based on the the data of 2010-2014 the Chinese listed companies of financial industry.Firstly, this paper reviews the background and related documents of the fair value hierarchy information.Secondly,this paper introduces the relecent concept and basis of value relevence.Thirdly,this paper recalls the history of the application of fair value in China.The paper analysis of the value relevance of Fair Value Hierarchy Informarion under the theoretical theory.And the paper discusses effects of corporate governance environment on fair value hierarchy information.The result of empirical analysis:Firstly,disclosure of fair value hierarchy information increased the value relevance of accounting information of the company;Secondly,the assets in level 1 and level 2 and the liabilities in level 3 measured at fair value have value relevance. The assets information' s explanatory power to stock price is decreased with levels ascent.But the explanatory power to stock price is lower than liabilities information.The main reason is due to the liability risk of cash outflows,and may even lead to financial risk, the users of financial statements pay more attention to liabilities information and give a higher weight to estimated enterprise value.The assets in level 3 and the liabilities in level 2 and level 3 measured at fair value did not pass the significance test.The main reson is that the sorts of financial tools measured by 3 levels are less in our current capital market environment,and the listed companies' holdings is less.Therefore,users of financial reports did not rely on the 3 levels of information estimating enterprise value, it does not have the value relevance;Thirdly,in the corporate governance environment as a reserching point,found that corporate governance environment did not have effect on fair value hierarchy information. China's current corporate governance structure is notproper to ensure the reliability of the fair value hierarchy information.This article proposes to improve the value relevance of fair value hierarchy information according to the empirical results.The purpose of the paper is to provide more relevant accounting information for users of financial statements to make the right decisions.Empirical research is based on the latest data that intend to provide suggest to complete No.39 accounting standards Fair Value Measurements under mandatory disclosure of fair value hierarchy information environment.