Research On The Impact Of The New Financial Instrument Standards On Ping An

In March 2017,China’s Ministry of Finance issued three accounting standards,including "Accounting Standards for Business Enterprises No.22-Financial Instrument Recognition and Measurement(Revised)",starting from the classification standards for financial instruments,make institutional arrangements for the accounting of financial instruments in terms of classification standards,measurement,impairment provision,presentation and disclosure of financial instrumentse,etc.,requiring phased implementation from January 1,2018 and achieve full convergence with the international standard for financial instruments IFRS9.The revision of financial instrument standards aims to standardize the application of financial instruments,improve the quality of accounting information,and prevent systemic financial risks.However,due to the immature development of China’s financial market,the weak basis of fair value measurement and the imperfect management of enterprise credit risk,the application of the new financial instrument standards faces high implementation costs,increased subjective judgments that affect the reliability of accounting information,and reducing the comparability of accounting information.The insurance industry is one of the industries with the largest holdings of financial assets,so it is necessary to study the application and impact of the new financial instrument standards in insurance companies.This paper selects PING AN,which was the first to apply the new financial instrument standards,as the research object,analyzes the changes of PING AN’s financial asset classification and impairment provision after the change of financial instrument standards,and compares the changes of operating performance,asset allocation and earnings management before and after the application of PING AN’s new financial instrument standards by using financial index method,event research method and Roy Chowdhury model,specifically analyze the impact of the implementation of the new financial instrument standards on PING AN.The study found that: the implementation of the new standards led to increased fluctuations in fair value gains and losses and a substantial increase in the impairment loss of financial assets,which had an adverse impact on PING AN’s operating performance,which in turn prompted it to adjust its asset allocation;To a certain extent,the implementation of the new standards has restrained PING AN’s behavior of using available for sale financial assets to terminate recognition for earnings management,improved the "cliff effect" of asset impairment losses,helped to improve the authenticity and reliability of the performance of insurance enterprises,and promoted the standardized development of financial markets and financial institutions.However,due to insufficient disclosure of fair value measurement information of financial assets,immature internal valuation technology of enterprises,and complicated operation of expected credit loss models,new earnings management behaviors has been triggered,which in turn reduces the quality of accounting information of financial instruments and affects the development of capital markets.In view of the impact of the new standards on PING AN,this paper proposes to ensure the effective implementation of the new financial instrument standards from the perspectives of institutional environment,regulatory measures,and technology platforms.Government departments should further improve the accounting standards system for financial instruments,and provide uniform implementation rules and operational guidelines;Regulatory departments should strengthen the supervision of accounting information disclosure,establish and improve the accounting information disclosure supervision mechanism,improve the supervision capacity of the regulatory agencies,and Increase the cost of companies illegally operating accounting information;Enterprises should strengthen risk management capabilities and improve valuation techniques.