Research On The Effect Of The Fair Value Measurement On Stakeholders

In the year of2006, our country promulgated the new accountingstandards in which the fair value measurement was introduced in17specific accounting standards such as financial instrument, the investmentreal estate, non-monetary assets transaction and so on, which causedwidespread concern. China’s accounting standards achieved convergencewith the international accounting standards. In2007China’s enterprisesbegan to implement the new accounting standards. However,the financialcrisis broke out after a year, in which the fair value became the focus ofcontroversy. Most investors believed that the fair value measurement wasbeneficial to provide useful information for decision-making and protectthe interest of investors. However, financial world argued that fair valuewas the culprit of the financial crisis and even demanded to stop the useof fair value accounting.Different stakeholders judge the economic consequences of the fairvalue measurement from their own interests. What are the consequencesof the fair value measurement for stakeholders? Though the controversy about fair value has stopped, game of stakeholders around the fair valuemeasurement continues. Since the financial instruments are the mainaspects of the application of fair value measurement and the bankingindustry is the major holders of financial instruments, the paper has aanalysis of the impact of fair value measurement on the stakeholdersbased on14listed commercial banks.The paper uses normal research as main method. First, the papersummarizes the theory of fair value and stakeholders. Then, the paper hasthe further study on the basis of the annual report of listed banks from2009to2011. Here are the conclusions:The introduction of fair value, especially in the use of financialinstruments standards improves the quality of accounting informationdisclosure and helps the shareholders get more decision-makinginformation. For investors, the use of fair value increases the bank’smarket risk and causes fluctuations in financial results. For managers,the fair value measurement provides profit manipulation space andincreases the difficulty of the risk management. So managers should take a cautious attitude to the use of fair value and improve their abilities tosolve specific problems using fair value measurement. For government, itshould further improve the theoretical system and the externalenvironment for the application of fair value measurement.