The Impact Of Fair Value Measurement On Price Synchronicity In China’ Listed Companies

Stock Price Synchronicity is described as the phenomenon of stock prices risingand falling in the same direction together. The extent of co-movement of stock pricemay be used to evaluate the information content of stock prices. If synchronicity ofstock price volatility is low, then the stock price includes more company information,has high information content. If the synchronicity of stock price volatility is higher,then the stock price contains more information of market and industry level. In thiscase, the listed companies are greatly influenced by the trend of whole economy. Thedifferences among listed companies are not reflected by the stock price which maymislead investors. Investors cannot select feedback and allocate information throughthe trend of price moment, which may weaken the function of capital market inallocating resources.The formation of stock price is guided by information. Well-developed capitalmarket is helpful in achieving effective allocation of recourses through the informationtransferred by stock prices of listed companies, so as to promote the development ofnational economy. Synchronization of Stock price volatility is one of the indicators tomeasure the capital market maturity. The new accounting standard for businessenterprises promulgated in2006. The most important principle is the trade-off betweenrelevance and reliability weighs heavily on the fair value measurement, showing that thegovernment accelerates the international convergence pace of accounting standards.Whether the fair value measurement model influences the transformation of capitalmarket information? It has been long controversial between accounting academictheories and practice that whether the fair value measurement model changes capitalmarket stock price synchronicity in our country? Although the application of fair valuemeasurement improves the effectiveness of the accounting information, but due toreliability of fair value valuation error, information of listed companies cannot betransferred to the stock prices, leading to increasing price volatility in synchronicity. Somaking clear that the fair value measurement model is to improve the efficiency of capital market information transmission or damage to the information transmission isvery important to the function of capital market.This article based on the above background. This paper investigated the impact onsynchronicity of stock price volatility of the assets and liabilities measured in fair value,and examines the company ownership structure (i.e., the shareholding of first bigshareholder, the second to the tenth largest shareholders’ ownership concentration), theanalyst attention, nature of the company, the company size, proportion of institutionalinvestors holding, financial leverage and return on equity, as well as the relationsbetween ROE and stock price synchronicity.The results of this research show that the implementation of fair valuemeasurement model helps to improve the transformation between firm-specificinformation and the capital market. Specifically, for the companies who revealed assetsmeasured in the fair value, its synchronicity of stock price volatility is lower, the fairvalue information enriches the firm-specific information of the company. But debtmeasured in fair value has not significantly increased firm-specific information.