Abstract：This paper chose A-share listed companies in the period of 2007-2011 as samples right after the implementation of new accounting standards, from the perspective of the stock index fluctuation, and studied the relationship between the fair value measurement and firm value. This paper found that the relationship between fair value holding gains or losses and firm value are susceptible to stock index fluctuation. Further research has also found that the fair value of the holding gains and losses have significantly different effects on the firm value. The results suggest that the stock market fluctuation enhances earning management and investors’ irrational investment. This research not only takes stock market into consideration, but also digs information depth of the fair value to distinguish different value relevance between the fair value holding gains and the fair value holding losses. The conclusion of this paper is important for enhancing value management, for investors to correctly judge the market reaction of the fair value measurement and for regulators to restrict earnings management behavior.
Keywords: Fair Value Measurement, Stock Price, Stock Market Volatility, Earnings Management
source:Finance & Trade Economics ,No4,2013