Corporate Governance And Value Relevance Of Fair Value Of Investment Property

New Accounting Standards for Business Enterprises of China issued in 2006 explicitly pointed that fair value is one of accounting measurement methods under the trend of convergence of International Accounting Standards.It is a significant reform and complies with the current market and economy.After the new accounting standards were issued,empirical research on fair value became a hot topic in China.Most researches focus on fair value of financial assets and debts,few papers talk about fair value of investment property.This paper chooses A-listed companies which applied fair value in the measurement of investment property to test the relationship between fair value of investment property and stock price.The time span strides ten years from 2007 to 2016 after the new accounting standards were issued.The results show that the correlation of the fair value measured investment property and stock price is significantly positive,which illustrates fair value measured investment property can significantly explain stock price.Compared with historical cost,value relevance of fair value is higher.While,the relationship between profit and loss from fair value changes and stock yield is not significant.This verifies that unrealized profit and loss from fair value changes hasn,t been recognized by investors,and investors can distinguish the unrealized and realized gains and losses in profit due to investors' suspect on the possibility of earnings management on profit and loss from fair value changes.This paper also tests the relationship between corporate governance and the option of fair value measurement on investment property and its value relevance.The results show that the structure of corporate governance has positive effect on the application of fair value in the measurement of investment property.Those corporations which have good quality of corporate governance prefer to use fair value to measure their investment properties.And effective corporate governance will greatly improve value relevance of fair value measured investment property.