THE VALUE RELEVANCE OF FINANCIAL INSTRUMENTS

• Main Authors: Jeng-jong Lin, 林正中
• Other Authors: HUI-LING CHEN
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/98571215829129879026

碩士 === 國立中央大學 === 財務金融學系碩士在職專班 === 96 === In order to improve the transparency of financial statements and converge with the International Financial Accounting Standards, the Taiwan Financial Accounting Standards Board issued Statement of Financial Accounting Standards No.34 “Accounting For Financial Instruments” （SFAS No.34） in December, 2003. According to the requirements of SFAS No.34, the financial instruments classified as “trading”, “designed financial asset at fair value through profits and losses” and “available-for-sale” are measured at the fair value. The derivatives are recognized in the financial statements based on the fair value. Furthermore, the unrealized gains and losses due to fair value changes are recognized in the financial statements. The objective of this study is to examine whether unrealized gains or losses due to changes of fair value are relevant to firm valuation. Based on Ohlson (1995) and Feltham and Ohlson (1995) valuation model, this study designs several valuation models. Except abnormal earnings and book value, valuation gain on financial instruments, valuation loss on financial instruments, unrealized gain or loss on financial instruments, and cumulative effects of changes in accounting principles are included into valuation model. We collect financial information on the population of listed companies from the Taiwan Economic Journal. The sample period of this study comprises 2006 and 2007. The empirical results show that abnormal earnings and book value are significantly relevant to firm valuation. Furthermore, valuation gain on financial instruments and unrealized gain or loss on financial instruments are significantly value-relevant. However, valuation loss on financial instruments and cumulative effects of changes in accounting principles resulting from the adoption of SFAS No.34 in 2006 are not value-relevant.