The Relationship Between Fair Value Hierarchy Measurement And Firm’s Investment Efficiency

As a kind of accounting measurement,the continuing use of fair value measurement has drawn the attention of all circles of the society,fueling an extensive controversy on the relativity and reliability of fair value accounting.The continuing use of fair value measurement was widely condemned for its disadvantages during the 2008 financial crisis,becoming one focus of discussion.With the increasingly importance of financial information in capital market and the increasingly discussion about accounting measurement,all circles of the society have proved that accounting measurement can improve the transparency of financial reporting information and help users of accounting information make decision.Then fair value measurement is gradually recognized as the main trend of the accounting measurement.But the few words of the accounting standards for fair value measurement is not enough to meet practical application of the accounting measurement.In 2006,the release of FASB157--“ fair value ” provides systematic framework and makes detailed regulations of its content,presenting the fair value hierarchy measurement.In 2014,the Treasury releases new definition of fair value,requiring the listed company adopt the fair value hierarchy measurement to confirm and disclose the assets and liabilities which meet conformity with the competent provisions.The principle of fair value is divided into three levels: obtaining quotations of same assets and debts in the active market;obtaining quotations of the similar and observable relevant assets and liabilities;adopting value appraisal techniques to obtain quotation of related assets and liabilities.As the criterion for the fair value of the relevant specification to extend further,the measurement model will also be further ascension in the practical application.In addition,academic and practical circles think that the use of the fair value measurement model can disclose more information,which can improve the transparency of financial reporting information and enhance the decision usefulness of financial disclosure.The existing studies have proved that the fair value hierarchy decision usefulness of information,but few scholars study the effect of fair value hierarchy on the investment efficiency this article thought that the fair value of layered information measurement will also impact on investment efficiency.In the capital perfect market,the projects of efficient utilization of resources that can obtain higher profits will continue to obtain additional capital investment,but the projects of the resource inefficiency and low return will be continuously cut capital spending.Finally the efficiency of investment will be promoted.In our country,the investment has been in the first place in the economic development.Resource utilization efficiency has become hot issue after the 18 th National People’s Congress.Therefore,the investment based on the level of enterprise is very important for the steady growth of the economy.Many scholars studies show that there exists a correlation between the level of information disclosure and the investment efficiency level.They generally think that the agency problem and financing constraint problem are the main reasons of the inefficient investment.Based on the above analysis,the relationship between the application of fair value hierarchy measurement and investment efficiency deserves further research.In addition,management equity as derivative problem of corporate governance structure has an important influence for enterprise information disclosure,so it makes sense to explore the management equity share in the efficiency of the relationship between fair value and investment efficiency.This paper takes listed companies from 2009 to 2015 as sample,using Richardson model as the tool of measuring investment efficiency.Based on the perspective of the fair value hierarchy measurement,this paper analyzed the relationship between the fair value hierarchy measurement and investment levels by solid empirical analysis and theoretical analysis.This study shows :(1)the first level of fair value information has reliability,which helps improve the quality of accounting information and reduces the information asymmetry between the contract parties and the agency costs,enhancing the investment efficiency of the listed company;(2)the second level of fair value information can enhance the investment efficiency of the listed company,which shows that the information content of the level 2 is lower than the first level 1,but this level still reveals many reliable and relevant information;(3)Because of the lack of accurate and fixed valuation techniques,the information measured by the third level of fair value is easy to be artificially manipulated,which will result in opportunistic behavior.But the information content of the net assets measured by the third level of fair value is not enough to affect an investment decision;(4)Overall,the information of net assets mainly composed of the first and second level of fair value can reduce the information asymmetry among the stakeholders and provide enough information for managers,which is helpful to improve enterprise’s investment efficiency;(5)the management ownership of stock has positive adjustment function for the relationship between the fair value measurement and the investment efficiency.In other words,the more managers have stock share,the more fair value information help improve investment efficiency.