Research On Value-Relevance Of Financial Assets' Fair Value

Research on Value-Relevance of Financial Assets'Fair ValueThis paper has selected some information about non-financial sectors listed in the A-share, adopts Incremental content of information law to examine two kinds of correlations on the condition of carrying out the new accounting standards. One shows correlation of the financial assets which apply the fair value measurement and its changes into the current profits and losses as well as the difference between fair value on financial asset available for sale and historical cost and stock price. The other reflects correlation of transaction monetary assets along with change and losses of fair value on financial asset available for sale and stock yields.On the base of improvement the price model and the return model establish cross-section regression model, The results show that the fair value of held for trading financial assets and available for sale financial assets has incremental value relevance compared to historical cost measurement, but held for trading financial assets and available for sale financial assets doesn't have a significant value relevance. Although the fair value of financial assets increased accounting information explanatory power to stock prices, on fair value of financial assets is still unable to show significant correlation even if in an active market in china. Three reasons can account for this phenomenon. The first is the error occuring in the fair value measurement method used by our nation. The second is the imperfection of market economic system the last is large fluctuation in capital markets. According to the problem found in the research, some suggestions have been put forward in this paper.