Fair Value Can Improve Earnings Quality?

February 15,2006 the solemn new accounting standards are announced to achieve international convergence, and on January 1,2007 at the implementation of the listed companies. The Accounting Reform and the essential difference between the previous reform. In scope, including basic guidelines issued, including 39 criteria, the equivalent of rebuilding our country's system of accounting standards. The most important is that, fair value has been the introduction of the system, it is this accounting reform, one of the most striking highlights. This reform represents our country's financial reporting system from an emphasis on the past information, emphasizing the reliability of the performance of the concept of profit based on the past and the future of equal importance to ensure a certain degree of reliability, based on the outstanding relevance of the concept of assets and liabilities apparent significant change. Both the capital market or to the accounting profession, have a very far-reaching impact.So far the implementation of the new guidelines for nearly three years, despite the implementation of the before and after the new guidelines, many scholars of the theoretical issues to explore a lot of very insightful, but the test results of this round of reform and the implementation of the study are not too many. International convergence with the greatest change in fair value of the new guidelines for the implementation of effective is what the relevance and reliability, whether the quality of earnings than the old criteria, high? On this issue of research and testing, not only as the standard-setting bodies to further improve the standard-setting provide a reference, but also help investors to update their concepts and precise understanding of the new guidelines for accounting information content.Fair value is to give investors and other statement users useful and relevant information for decision-making. On the one hand, the system shows the introduction of fair value is the inevitable trend of development of financial statements. On the other hand, the introduction of the fair value of care shows that China is now in force measured at fair value based on conditions are not yet mature to be affected by various factors.In this paper, the new guidelines for the fair value perspective, a listed company earnings quality and economic consequences. Study of the gradual deepening of the path from the surface to the point. For the new guidelines, tested at fair price for the largest surplus in the new guidelines changes the quality of information surrounding the basic objectives of accounting standards reflect a surplus of quality of information, one of the most important attributes-the value of relevance to earnings of listed companies an analysis of quality.Study of the basic ideas are:First of all, the use of analytical paradigm, in defining the concept, based on the pairs of fair value, earnings quality, fair value and the value relevance of three aspects of the theory of summing up and summary; Second, in reviewing the relevant literature, based on the surplus quality of the information to make research and design and empirical analysis; In the end, summarizes the conclusions of this study.This article first to define the relevant concepts, and then three aspects of this study-at fair value, earnings quality, and value relevance of fair value of theoretical analysis, empirical research done behind the theoretical support.Empirical research component is based on theoretical analysis, based on the literature review started. In the empirical study of fair value measurement mode, the surplus part of the quality of the information, using the model generally adopted international research study of net income per share, respectively explanatory power on stock prices, balance sheet assets and liabilities of the explanatory power of stock prices, as well as net profit and net assets of the explanatory power of the stock. They respectively represent the income statement, balance sheet, income statement and balance sheet, as well as the joint for the stock price correlation.This article includes Introduction and two parts of the body.The first part consists of chapter topics of Introduction to the background and significance of research ideas and research methods, paper structures introduction.Text from the second chapter, a total of four chapters. The second chapter is an overview of literature related to earnings quality, earnings quality, in theory, expounded on the relevant concepts, evaluation factors, research methods, etc.;Chapterâ…¢is a fair value of the earnings quality effect on the value relevance of fair value of the literature review, based on a new theory to explain the introduction of fair value accounting standards for earnings quality and the impact of earnings management, and relevant data have been published by a simple analysis of the surplus of information under the new guidelines change;Chapterâ…£, through empirical analysis of the income statement and balance sheet information in 2005-2008 the correlation with stock price changes, a general analysis of the new guidelines after the introduction of the fair value of earnings quality have taken place in how the changes.Chapterâ…¤is the conclusion of the study, summed up the basic conclusions of the study, analyzed the limitations and shortcomings of this research and describes future research directions In this paper, theoretical analysis combined with empirical research methods of writing, from the value of relevance for the focus on the use of fair value measurement of earnings quality of listed companies after an analysis, study the following conclusions:1. In the old system of accounting standards, a relatively stable for 2005-2006 for two years of a surplus of information-related there is a considerable difference, indicating the relevance of accounting information by various factors, including the degree of market integrity, investor maturity, the market regulatory system and so on.2. Income Statement Information Although the degree of relevance for the stock price in 2005-2006 a slight decline, while in the fair value re-was introduced in 2007, this research sample, relevance of information for the earnings were significantly higher than the year before, indicating investors more concerned about the surplus of information, from this point viewpoint may be a surplus of quality improved. Although the degree of correlation in 2008, declined again, but mainly attributed to the impact of the financial crisis caused a drop of contrast, but not much, so I still believe we can not deny the new guidelines after the promulgation of the positive impact on earnings quality. 3. And the relevance of changes in the income statement, the trend is different is that the relevance of balance sheet information presented is almost the opposite of change, in 2005-2008 was a gradual decline, under the new guidelines for the introduction of fair value measurement of assets and liabilities under the table information-related degree is significantly lower, on the one hand may be due to the income statement of information investors are too concerned about the expense of the balance sheet, on the other hand may be due to the market environment.4. The balance sheet and a profit of joint correlation test showed that the correlation between the joint significantly dropped in 2006, while the fair value measurement introduced in 2007 has increased the relevance of the overall information. By 2008, the slump in capital markets makes the relevance of a certain degree of decline in again.Through analysis and testing, the sample companies in 2005-2006 under the old system of rules showed a certain quality of earnings volatility, which is consistent with previous studies where there is shows a lack of accounting standards, earnings quality and stability associated with the introduction of the fair value measured in 2007, earnings quality in this study improved in some respects, despite the results of the analysis from 2008, it seems that earnings quality has declined, but the other there is no increase or decrease. In this I believe that uncontrollable factors that are unique, you can increase the sample after the interval but will diminish its impact. I believe that in the economic, legal environment gradually improved under the premise of the future for a longer period of time, the introduction of the fair value of the surplus under the new accounting standards of quality must be higher than under the old accounting standards, earnings quality.