Earnings Volatility And The Choice Of Investment Property Measurement Pattern

It has been more than eight year since the investment property was presented separately in the accounting standards in our country. The investment property can be measured by cost pattern or fair value pattern, however, the cost pattern cannot reflect the value relevance of this asset and the fair value pattern cannot ensure the reliability of the financial information of this asset, in this case, focusing on two kinds of measurement models of investment property, the domestic scholars have carried on the comparative study and searched the reasons that the enterprises prefer to choose which model. Under the condition of the coexistence of two kinds of measurement model on this asset, the practice of accounting treatment is usually complicated, the confirmation of gains and losses is fuzzy, and the profits is confused. Besides, there are still many non-standard and non-transparent on the relevant information disclosure of the evaluation and changes in the gains and losses of investment property, thus, it often appears the problem of misleading investors. With the passage of time, though the cost pattern occupies absolute advantage in the two models, the use of the fair value pattern is increasing. Due to the follow-up measurement model of investment property involves the choice of accounting policy, it generally believed that the choice of accounting policy is an important means of earnings management in the domestic and foreign research. And several scholars found that individual listed company make use of the fair value pattern of investment property to whitewash the financial statements; therefore, this article takes the earnings volatility to examine whether it is widespread phenomenon that the listed enterprises use the follow-up measurement model of investment property to change surplus quality according to their earnings in the past. Under the condition of imperfect guide of the current accounting standards in our country, this paper also take some countermeasures about how to avoid the listed company to whitewash surplus by the choice of investment property measurement patterns thus misleading stakeholders.With the combination of normative and empirical research, qualitative and quantitative analysis, through comparison, induction and deduction method, this paper takes the earnings volatility and ownership to examine the selection results of investment property measurement pattern about the A-share listed companies during the time period from 2007 to 2014.It not only enrich the relevant content on the earnings management and the choice of accounting policy in domestic research, but also provides a reference for the accounting policy in the future, provides a direction for further specification on the use of investment property measurement model in domestic enterprises, promotes the domestic enterprises to reflect accounting information of investment property more objectively, and help stakeholders to make the right decision.In this paper, the study found:in addition to considering the level of corporate debt, the value relevance of this asset, the scale of company and other factors, enterprise surplus quality is also a crucial factor to the choice of the follow-up measurement model of investment property for listed companies. The specific performance show:(1) the greater the earnings volatility, the more unstable the performance in the previous year, the more likely to use the fair value pattern; the smaller the earnings volatility in the previous year and the more stable performance of the listed enterprises in the previous year, the higher the possibility of using the cost pattern of investment property. (2)The non-state-owned listed enterprises are more likely to use the fair value pattern of investment property; the impact of earnings volatility on the choice of investment property measurement pattern in non-state-owned listed companies is weaker than that of the state-owned listed companies.