Challenges for Implementation of Fair Value Accounting in Emerging Markets: Evidence from China*

He, Xianjie; Wong, T.J.; Young, Danqing

doi:10.1111/j.1911-3846.2011.01113.x

Cited by 180 publications

(167 citation statements)

References 51 publications

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“…He et al (2012) Table 7 shows that in the sample of Em=0, the coefficient of Post×Fv is 0.131, and its corresponding t statistics is 2.46, which is significant at the 5% level, while in the sample of Em=1, the coefficient of Post×Fv is positive but not significant. In the full sample, the coefficient of Post×Fv×Em is -0.080, and its corresponding t statistic is -1.70, which is significant at the 10% level.…”

Section: Earnings Management and Management Forecastsmentioning

confidence: 97%

“…Following and He et al (2012), we use the following model (1) and model (2) to test hypothesis 1: Fv is a dummy variable measuring the impact of fair value accounting. When a firm reports gains or losses from changes in fair value after the implementation of the new accounting standards, 6 then we define it as being highly affected by fair value accounting:…”

Section: Methodsmentioning

confidence: 99%

“…Fair value accounting changes the way in which earnings are determined and increases the information asymmetry between external investors and public firms. For example, He et al (2012) find that fair value accounting significantly increases analyst forecast errors. Tan et al (2011) find that gains and losses from changes in fair value induce overreaction by the market.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The Impact of Fair Value Accounting on Corporate Disclosure

Luo

2016

China Account Financ Rev

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This paper examines the impact of fair value accounting on corporate disclosure after the implementation of the new accounting standards in China. We find that the frequency of management forecasts increases significantly for firms affected by fair value accounting. Further analysis reveals that this relation is more pronounced for forecasts issued after the fiscal period end and for forecasts conveying bad news. Our study provides new evidence about the economic consequences of the new standards. In addition, we explore the determinants of management forecasts from a standard-setting perspective, which contributes to the line of research on corporate disclosure.

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Section: Earnings Management and Management Forecastsmentioning

confidence: 97%

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The Impact of Fair Value Accounting on Corporate Disclosure

Luo

2016

China Account Financ Rev

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“…For example, Liu et al (2009) provide empirical evidence that accounting quality has been improved through decreased earnings management and that the value relevance of accounting information has increased since 2007. On the other hand, He, Wong, and Young (2012) examine the unintended consequences of applying fair value accounting (FVA) to trading securities and debt restructuring. They find that earnings management, smoothing activities, and weak institutions (e.g.…”

Section: Financial Reporting: Accounting Standards Reform and Firms' mentioning

confidence: 99%

Structural Changes in the Chinese Stock Market: A Review of Empirical Research

2014

China Account Financ Rev

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China’s stock market has gone through major structural changes since its inception in the early 1990s. In this survey article, we review the empirical literature published in 15 leading accounting and finance journals from 1998 to 2013 that documents these important structural changes. In analysing this literature, we focus on the ‘distinctiveness’ of the Chinese stock market compared with developed stock markets (e.g. US) and the research opportunities generated by the China setting. Key themes include China’s share issue privatisation (SIP) reforms, the political connections in privately owned companies, the characteristics of Chinese listed companies and their governance, the regulatory environment reforms in China, and the evolving role played by auditors and other information intermediaries.

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“…Barth & Landsman, 1995;Carroll, Linsmeier & Petroni, 2003;Ball, 2006;Karstetter & Lien, 2009;Rabin, 2009;Badertscher, Burks & Easton, 2012;He, Wong & Young, 2012;Hlaing & Pourjalali, 2012;Cristin & Miticã , 2013;Kaya, 2013;Taplin, Yuan & Brown, 2014). Such complexity and ambiguity have built on the fact that fair value is only found in the active markets which encouraged entities to put more emphasis on estimation approach to identify the fair value of the asset or liability (Barth & Landsman, 1995).…”

Section: Fair Value Accounting As a Controversy Systemmentioning

confidence: 99%

Fair Value Accounting: A Controversial but Promising System

Sawalqa

2015

AFR

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There is almost a worldwide consensus that the usage of fair value accounting is not an easy task due to a number of limitations that affect its reliability. Prior studies in fair value accounting have unanimously agreed on the existence of clear defects in measuring fair value, especially under level 3 of fair value hierarchy where the active market does not easily exist for the asset or liability. Based on previous literature in the field, the current study discusses the reasons for the ongoing debate on the reliability of fair value accounting and also suggests some relevant procedures to enhance fair value accounting system. In particular, the paper offers some creative suggestions that standard-setters (e.g. FASB and IASB), regulators, practitioners and academics should globally adopt to ensure a brighter future for fair value accounting. In addition, the paper provides a set of the necessary future research avenues in fair value and the related accounting standards.

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Challenges for Implementation of Fair Value Accounting in Emerging Markets: Evidence from China*

Cited by 180 publications

References 51 publications

The Impact of Fair Value Accounting on Corporate Disclosure

The Impact of Fair Value Accounting on Corporate Disclosure

Structural Changes in the Chinese Stock Market: A Review of Empirical Research

Fair Value Accounting: A Controversial but Promising System

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