Empirical Research On The Impacts Of Fair Value Measurement Of The Investment Real Estate On Earnings Management

It is stipulated in the ASBE(Accounting Standards for Business Enterprises) in 2007 that investment real estate, as an independent account, introduce fair value econometric mode in its follow-up measurement, giving the enterprises the option of follow-up measurement mode. However, since the new standards has been implemented for seven years, there is only about 3% of the investment real estate companies choosing fair value measurement mode to do follow-up measurement in the practice, which is doubtful that whether the goal of standards can be realized to improve the correlation of accounting information quality by introducing fair value econometric mode in investment real estate. If the answer is no, whether the enterprises which choose the fair value econometric mode are motivated to manipulate earnings, in which way, the policy provide what kinds of opportunity for enterprises to manipulate earnings. Based on the above analysis, this paper tries to discuss whether the fair value in the follow-up measurement of the investment real estate can improve the accounting information correlation, and whether the follow-up measurement mode of the investment real estate can be the tool of manage the earnings.This paper adopts the basic research approach of " questions â†' policy interpretation â†' empirical analysis â†' conclusions and policy recommendations". In the part of policy interpretation, the paper introduce the define of the investment real estate and specific provision of ASBE, analysis the advantages and disadvantages of fair value econometric mode, present the application status of the follow-up measurement mode of the investment real estate, and focus on the impacts of accounting of the investment real estate on earning management:(1) the impacts of cost mode transfer to fair value mode on earning management;(2) the impacts of confirm and measurement of fair value on earning management;(3) the impacts of transfer to normal asset on earning management;(4) the impacts of return the withdrawn assets impairment on earning management.In the research design, the paper start from the correlation of the accounting information and the earnings management, constructed the price model and modified Jones mode. Based on decision-making useful concept, the principal-agent theory and information theory, propose three assumptions:(1) the fair value in the follow-up measurement of the investment real estate can’t improve the accounting information correlation;(2) follow-up measurement mode of the investment real estate impacts the earnings management;(3) The result issued by independent evaluation agency used in fair value measurement reduce the impact on earnings management.This paper use SPSS19.0 statistical analysis software, regression analysis the sample data from 2007 to 2013. The empirical research shows that:(1) the fair value in follow-up measurement of the investment real estate cannot increase the accounting information correlation;(2) the investment real estate accounting does become the tool of managing the surplus;(3) the independent third party assessment will narrow the space for enterprises to manage the surplus with fair value measurement mode.Policy suggestions by this paper are as follows:(1) Standardize the application of fair value to the accounting of the investment real estate, implement more detailed rules;(2) Implement unified standards of the measurement of the fair value, improve the precision of the fair value measurement;(3) Standardize the order of the real estate market, perfecting the information disclosure system;(4) Promote the development of assets appraisal industry, standardize the market for real estate appraisal.The innovations of this paper:(1) introduce the variable indicators(measuring the effect of changes in fair value gains and losses on earnings management) of change rate of net account in investment real estate for the first time, and measure the earnings management of sample companies using asset impairment back and transformation between the assets.(2) use the mean value between beginning values and ending values to measure the indicator such as the operational accrued profits and the change rate of net account in investment real estate. It is conducive to matching the data and effectively measuring the samples of investment real estate companies by using the fair value mode so as to improve the empirical accuracy.