Consequencesof Fair Value Measurement Ontne Executive Compensation

Scientific and rational management compensation mechanism can take advantage of accounting information available to measure the degree of management's efforts to reduce agency costs.At present,most listed companies will be the current business operating performance as the main measure of management effort.In 2007,the Ministry of Finance for the implementation of the accounting standards for business enterprise introduced fair value to financial accounting;in 2009,the ministry of Finance provisions included in the “capital reserve” changes in the fair value of the presentation on the income statement and statement of changes in owners' equity at the same time;in 2014,“enterprise accounting Standards No.39 – fair value Measurements” guidelines issued by the Ministry of Finance has denied the method of fair value clearly,and puts forward the disclosure of information on the fair value measurement requirements.Therefore,fair value measurement attributes affect accounting performance is becoming more and more important,especially for most financial assets of the impact of the banking sector is particularly important.This paper selects 16 of Chinese listed commercial Banks in 2009-2014 data as the research sample,studied after the introduction of fair value measurement attribute for managers' pay what effect,make up for the shortcomings of the implementation of fair value measurement effect research.Transactional financial assets and available for sale financial assets measurement are using fair value measurement attribute,but the fair value of the tradable financial assets changes included in the "changes in fair value gains and losses" project,become the most main factors affect the project on the changes in the fair value;Changes in the fair value of available for sale financial assets are included in the balance sheet of "capital reserve" project,and presented in the income statement of "other comprehensive income after-tax net" project.These two kinds of changes in the fair value of financial assets on the operating performance of listed Banks has a different effect.In this paper,two kinds of changes in the fair value of financial assets as the independent variable and studied its bank managers' pay what effect.Through theoretical and empirical analysis,we found that(the fair value of the tradable financial assets change on bank managers pay with incremental effect,and the changes in fair value gains and losses impact on managers' pay has asymmetry;Changes in the fair value of available for sale financial assets had no significant influence on managers' pay.Empirical analysis results confirmed that the managers of listed Banks in China there is no reasonable compensation mechanism of the phenomenon,and after the introduction of fair value measurement attribute,fair value of the different categories to the attention of a bank's management at different levels,can lead to different information for managers to changes in fair value have different impact between compensation and bank performance,thus there may be a bank executives through better performance in order to obtain higher pay and control moral hazard of financial assets classification.According to the research question,this article put forward to improve the fair value measurement standardization and perfecting the mechanism of bank management advice.