Research On The Value Relevance Of Fair Value Accounting

Beaver, a scholar of accounting in America point out that the paramount object of accounting information is helping to make useful decisions. Measurement perspective advocates strengthening the availability of accounting information to make useful decisions by improving the method of measurement, which leads to the birth of fair value. recent years, the International Accounting Standards and other Accounting Standards in some developed countries such as USA, have used fair value as the most important even the preferred measure attribute in succession to enhance the value relevance of accounting information, they think that fair value can be more truly reflecting the net assets and accounting income of company, and provide more useful accounting information to help investors, creditors and other correlative people to make decision.Our country has been quite cautious to the exertion of fair value all the time, with the developing of the market economy, our country's New Accounting Standards promulgated in 2006 has widely introduced the fair value concept under the background of accounting standards'international convergence. However, in the process of international convergence, the environment of market economy in our country is different from other countries, there is lack of related experience in the practice field and the use of fair value is oppugned in the financial crisis in 2008.Under such situation, we need to discuss the suitability and the implementation effect of fair value in our country. To solve this problem, the paper conducts investigation by theoretical analysis and empirical research and the main conclusions are as follows:(1) Changes of fair value have significant value relevance on the base of historical cost; Loss or profit from changes of fair value is correlated with the stock price and the earnings yield. These appearances suggest that in the financial reporting by the new accounting standards, changes of fair value which act on net assets has significant value relevance, so does the loss or profit from changes of fair value.(2)The value relevance of the profit from changes of fair value is more significant than the loss from changes of fair value.(3)The use of fair value in the new accounting standards has greatly enhanced the value-relevance of accounting information in companies whose net profits are positive and aren't special treated (ST); However, when it refers to companies whose net profits are negative or are special treated (ST), there is no strong evidence of relationship between the use of fair value and the stock price, even is negative correlated.(4)In companies whose net profits are positive and aren't special treated (ST), larger the proportion of profit from changes of fair value in the retained profits is, more significant the value relevance of the fair value information. However, when the proportion is too large, the value relevance is lost.(5)Compared to net assets, investors pay more attention to the profit information; compared to realized income, the stock price and earnings yield are more depend on unrealized income caused by changes of fair value, it means that loss or profit from changes of fair value have more significant value relevance.Results of the paper indicate that the use of fair value in the new accounting standards has improved the value-relevance of accounting information in some degree. Under the background of accounting standards'international convergence and according to our country's situation, we need to push the use of fair value moderately and steadily.