Research On Correlation Between Asset Depreciation Policy And Enterprise Value

The asset impairment reserve is always concerned by the people. The comments on the impact of asset impairment reserves on the enterprise has not been interrupted since 1998 that our country has fully accrued asset impairment reserves. At first, the state promulgated accountancy's standard to carry out the allocation of impairment of assets reserves. On the one hand, it was to closer to the foreign accounting standards, make local companies suitable to the requirements of International Accounting Standards and step abroad sooner. On the other hand, it was to dry the accomplishment of the company off, make the accomplishment of the company more pure to provide a good opportunity for their future development.The new policy of asset depreciation which was issued in 2006, changed the way of long-lived assets impairments, defined that the depreciation of long-lived assets can not be reverted. The accounting policy of asset depreciation maked the choice space on the identification and the measurement of assets depreciation in the listed companies decrease greatly. Since the asset depreciation policy was implemented in 2006, how was this new policy carried out in the companies? What was the impact of these reforms on the enterprise value of listed companies in the five northwest provinces? All of these questions are worthy of the attention of related departments. Based on the study of normative accounting research on the asset impairment of listed companies in the five northwest provinces of China, this paper examines whether there are any correlations between the policy of asset depreciation and the enterprise value from 2006 to 2008.Then this paper draws the conclusions as follows:Firstly, the allocation of impairment of assets reserves of the listed companies in the five northwest provinces is significantly affected by the rate of return of total assets and the rate of assets and liabilities, not obviously by the enterprise scale. Secondly, the enterprise value of listed companies in the five northwest provinces is significantly affected by the allocation of impairment of assets reserves. Thirdly, the enterprise value of listed companies in the five northwest provinces is also significantly affected by the rate of return of total assets, not obviously by the rate of assets and liabilities and the shareholding ratio of the biggest stockholders which is always considered to have information content.