The Effect of Fair Value Accounting on Value Relevance of Financial Statements

• Main Authors: Peng Po, 彭博
• Other Authors: Hsu Shu-Wei
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/15078270320315926686

碩士 === 東海大學 === 會計學系 === 99 === The Effect of Fair Value Accounting on Value Relevance of Financial Statements Advisor：Dr. Shu-Wei Hsu Graduate Student：Peng Po Student No：G96430029 Abstract Fair value is the fundamental concept in setting IFRS, and it tries to measure the market value. If financial statements were prepared under the fair value-based financial standards, then it could reflect the economic substance of company. And investors also could make efficient investment decisions base on the financial statements. Taken together, fair value-based financial standards can increase the value relevance of financial statements. Thus, this study investigates whether value relevance changed after the standard setter adapted to fair value-based financial standards in Taiwan since 1999. The sample consists of listed firms during 1991 to 2008 in Taiwan. This study use the hedge portfolio measure and the explanatory power measure which referred to Francis and Schipper (1999) to examine the effect of fair value accounting on value relevance of financial statements. OLS regression was used to test whether value relevance improved after standard setter adapted to IFRS in Taiwan since 1999. Under the hedge portfolio measure, the result shows that a significant increase in value relevance of the sign of change in earnings before extraordinary items. Under the explanatory power measure, the result shows that there have significant increase in adjusted R-square both in Balance Sheet Relation and Book Value and Earnings Relation. Taken together, the results show that the value relevance of financial statements increase after the standard setter adapted to IFRS in Taiwan since 1999. Keywords: Fair value accounting, Value relevance , IFRS