Fair Value Measurement And Earnings Persistence

As one of the factors in the earnings quality measurement system,earnings persistence is an effective indicator for listed companies to provide external information users to understand the company's current operating conditions and future development prospects.Therefore,it has important research value in the field of accounting research.According to the current research,the following two factors have a great impact on the sustainability of earnings:First,the basic business level of the enterprise affects the business performance of the enterprise;second,the measurement error of the accounting system leads to information distortion,which affects the accounting surplus.The change of accounting measurement attribute involves the change of measurement method,which has an important impact on accounting infonnation error.Anctil and Chamberlain(2005)found that changes in accounting methods affect corporate earnings.One of the ways is to use depreciation to increase earnings,resulting in a phased increase in earnings continuity[1].China's application of fair value has gone through the process from initial trial to suspension to re-introduction.This process not only proves the trend of China's accounting standards moving closer to international financial accounting standards,but also proves the determination of fair value are applied to the Chinese market.In 2014,China's Ministry of Finance promulgated the" Accounting Standard No.39-Fair Value Measurement",and required all enterprises to conduct accounting treatment of related assets in accordance with the standard.This standard combines the current economic environment background,the scope of fair value measurement,and stratification,valuation,disclosure and other content have made more detailed provisions.The fair value measurement has gradually attracted the attention of the national leaders,and the scope of use has gradually expanded,which has led many scholars to pay attention to its impact on the quality of accounting information.Based on this background,accounting to the scholars of domestic and foreign research literature on fair value measurement and earnings persistence,the research hypotheses are put forward in combination with the related theories of fair value measurement,earnings management and market volatility.The linear first-order regression model is used to study the data of China's A-share financial industry listed companies in 2010-2017.The empirical study examines the impact of fair value measurement and its level on the company's earnings continuity.The study found that fair value measurement has significantly improved the company's earnings persistence;however,this improvement is mainly because the second and third levels of fair value measurement have a significant positive impact on the company's earnings persistence;on the contrary,the first level of fair value measurements have significantly reduced the company's earnings persistence.Further research has found that the negative impact of the first-level fair value measurement on earnings persistence mainly exists in the group with higher economic uncertainty,indicating that the first-level fair value measurement is mainly transmitted to the enterprise statements through market fluctuations,thereby reducing persistence of corporate earnings.At the same time,the study found that the positive impact of the second and third levels of fair value measurement on earnings persistence exists only in the sample companies of the low audit quality group.Indicating that management uses the second and third levels of fair value for non-opportunistic motivations to earnings management,smoothing profits,thus affecting the company's earnings persistence.