Research On Fair Value?Accounting Conservatism And Inefficient Investment

The development of Accounting Conservatism and Fair Value has been controversial.In 2008,IASB and FASB which praise highly Fair Value tried to abolish the Accounting Conservatism.The majority of scholars discussed and concluded that Accounting Conservatism has a positive effect,so keep it.However the economic consequences from Accounting Conservatism still remains to be further tested.<Fair Value Measurement Standards> promulgated in 2014 in China,and the measurement more standardized.Previous studies only consider the impact of Gain or Loss from Changes in Fair Values,ignoring the impact of other factors such as Equity from Changes in Fair Values,so the study on the economic consequences from Fair Value should be more comprehensive.With China entering the "New Normal",economic growth would transfer from the high speed to the high quality.As one of the “Troika”,investment is of the great significance for economic growth in China,and enterprises' Inefficient Investment at the micro directly affected investment at macro,so the Inefficient Investment has become one of hot research issues in Accounting profession recently.Based on this,the paper studies the Fair Value,Accounting Conservatism and Inefficient Investment,in order to enrich the empirical evidence,and provide reference to the inefficient investment behavior of listed companies in China.Firstly,the paper comb the relevant literature about Fair Value,Accounting Conservatism and Inefficient Investment,then camp up with hypothesis based on Principal-agent theory,Asymmetric Information theory,Investment theory,,and related theory.Secondly,through the empirical study,we found that :(1)the Accounting Conservatism is negatively related to the Inefficient Investment,in other words the Accounting Conservatism have the ability to curb Overinvestment and alleviate Underinvestment;(2)Fair Value which only considered Gain or Loss from Changes in Fair Values may increase the irrational psychology,and cause the Inefficient Investment.However,Fair Value which considered Gain or Loss from Changes in Fair Values,Equity from Changes in Fair Values,and impairment would not necessarily cause InefficientInvestment;(3)Fair Value will weaken the negative relationship between the Accounting Conservatism and the Inefficient Investment,namely the Fair Value will weaken the ability of Accounting Conservatism to curb Overinvestment and alleviate Underinvestment.In the end,the paper puts forward relevant policy suggestions based on the above conclusions.However,because the sample selects only during 2013 to 2015 A-share listed companies of China on the Mainboard,it still remains to be further tested that if the conclusion could extend to other samples,in this paper.