The Relation Between Company Characteristics and Fair Value Option

• Main Authors: CHEN, HONG-LIN, 陳泓霖
• Other Authors: CHEN, WEI-TZU
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/dw427e

碩士 === 國立臺北大學 === 會計學系 === 106 === Under the purpose of mitigating the accounting mismatch caused by the accounting standards, the US Financial Accounting Standards Board (FASB) published the Statement of Financial Accounting Standards (SFAS) No. 159, Fair Value Option for Financial Assets and Financial Liabilities, in 2007, which allows companies to measure the financial assets or liabilities designated by the instrument at fair value through profit or loss. Most of the previous studies focused on the differences of the motivation of adoption between early adopters and normal adopters. This paper investigates whether certain company characteristics before the adoption of fair value option would affect the firm’s use in the long run. This paper takes the second quarter of 2008 to the fourth quarter of 2016 as the study period to exclude the early and first quarter of normal adoption period. The company characteristics are analyzed based on three perspectives: earnings volatilities, earnings management, and information disclosure. The empirical results of this study indicate the incentives of firms’ adoption in financial assets as follows: the greater the volatilities of firm earnings, the greater the degree of information asymmetry, and the higher the cost of equity capital, the less likely firms adopt fair value option. However, firms with the incentive of earnings management tend to adopt fair value option. On the contrary, the incentives of fair value adoption in financial liabilities differs from those of financial assets. For financial liabilities, the greater the degree of information asymmetry, the more likely firms adopt the fair value option. However, the incentive of earnings management for firms to use fair value option in financial liabilities is the same as financial assets. It is that firms with earnings management incentive tend to adopt fair value option in financial liabilities.