A Study On Decision Usefulness Of Fair Value Measurement Under Hierarchy Theor

While decision usefulness is becoming the common view of standard setters of all countries, financial statement with historical cost as its measurement attribute has been unable to meet the statement users. Hence, the significance of the fair value has been increasingly emphasized. In 2006, as the issue of SFAS 157, fair value has become the most important measurement model in financial accounting."Fair Value Hierarchy", which covers both measurement and disclosure, has been the brightest spot of FAS 157, aiming at resolve the reliability problem of fair value measurement from all hierarchies. Standard setters of all countries start to release their disclosure requirements standard of fair value hierarchy one after another. In China, though there is no relevant authority file direct at the compulsory information disclosure of fair value hierarchy. With the study of A-share listed financial insurance institutions'Annual Return from 2007 to 2010, the majority companies have started to disclose the fair value hierarchy. And it is on a increasing curve year by year. In this background,with theory analysis and empirical examining, this paper aims at studying whether information disclosure of fair vlaue hierarchy will be accepted by China capital market as well as whether hierarchies of fair value are relate to the rights and interests value of the company.The findings of this paper can help the standard setters to know the quality of standard setting timely and serve as reference for further improvement of accounting reform.At last, it can also serve as the guide for information users to do rational investment.Based on fair value hierarchy theory, non-active market theory and value relevance theory, the paper adopted Ohlson price model and its deduced modelto, took A-share listed financial companies between 2007 and 2010 in Shenzhen city and Shanghai city as samples, and mainly focused on the following three questions: (1)whether the disclosed information of fair value hierarchy has incremental value relevance; (2)whether the relevant fair value of the assets(liabilities), with disclosed hierarchy information, is relate to the share price; (3)whether fair value of assets(indebted)'s three hierarchies can reflect the changes of share price.The empirical findings are: (1) companies with disclosed hierarchy information can enhance the share price more easier than those without disclosed hierarchy information.And the fomer have remarkable incremental value. It shows that investors think highly of the information source of fair value input variables,and they trust the former greater; (2) the disclosed overall scale of relevent fair value of assets FVA can reflect the changes of share price properly, so it will be useful to the investors.Howver,the regression coefficient of FVL has failed the significance test,which might means that no enough attention has been paid to liabilities of fair value measurement when investors are making decision; (3) only level1 and level2 have remarkable value relevance with share price,and FVA1 has higher incremental value than FVA2; But FVA3 and FVL1,FVL2,FVL3 all failed the significance test. It shows that investors prefer to FVA1 and FVA2,which are more reliable; Due to its information asymmetry and inherent valuation deviations, FVA3 enjoys less reliability.As a result,investors might pay less attention to it.In addition, the sacle of FVA3,FVL1,FVL2,FVL3 is much smaller than FVA1,FVA2,which may be the reason why investors do not choose them as reference information.At last, based on the findings, this paper proposed the following three suggestions: (1) set uniform fair value measurement guide; (2) divide measurement grades, increase measurement disclosure; (3) pay attention to the cooperation in the field of both accounting and assessment.