Empirical research on the impact of fair value measurements on earnings management analysis

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Empirical research on the impact of fair value measurements on earnings management analysis

1. Introduction
2. Background and hypothesis
3. Literature review
5. Sample selection and description
6. The test on the earnings management universality
7. The Impact of the Fair Value Application on Earnings Management 7.1 Correlation Analysis of the Main Variables
7.2 The Empirical Test of Linear Regression Equation
8. Limitation
9. Summary
Appendix I .
Appendix II .

The impact of fair value standard application towards enterprise is far-reaching and important, mainly in measurement methods of the changes on assets and liabilities way. This shift of fair value measurement method helps business executives for some sort of motive or target to conduct earnings management, thereby artificially adjusted profits. The authors focus on the study of earnings management in the listed Corporation under the fair value model during the financial crisis. We investigate the correlation between the application of fair value accounting and earnings management for providing the policy basis to improve fair value accounting and standardizing corporate earnings management behavior. We collect the sample data by selecting the Chinese A-share listed companies, and use the modified Jones model as a tool to prove the listed companies in the existence of widespread earnings management behavior. Descriptive analysis and regression analysis also could be to verify the fair value model dimension - the significant correlation between asset impairment losses and the extent of earnings management of listed companies. It comes to the conclusion that China's listed companies measured by fair value model do have an impact on earnings management, and the application of the fair value increases human subjective estimates to be left smoothing space for earnings management. 1、Introduction

1.1 Statement of the problems
With the process of the globalization of the world economy, national capital markets continue to be progressing and improving. However, highly competitive economic environment and the continued growth of inflation increased economic uncertainty. The traditional accounting based on historical cost measurement attributes gradually losing relevance of accounting information, so fair value accounting emerged. In 2008, when the U.S. subprime mortgage crisis has evolved into a global financial crisis, the fair value is pushed to the cusp, people from all walks of life took a different attitude to fair value measurements. The United States Securities and Futures Commission and relevant government agencies accused and halted fair value measurements. Therefore, how to regulate the use of fair value measurements, give full play to the role of fair value measurements, and promote the healthy development of the accounting system and the protection of healthy competition in the financial market? That is accounting, finance, and regulatory agencies must work together to improve it. In the beginning of this century, Enron and WorldCom events have occurred, so that the authenticity and reliability of surplus data have been questioned. To some extent, these financial fraud companies smooth corporate profits and manipulate earnings management. International financial scholars have been studying this topic in the last three decades, in particular Healy (1985), DeAngelo (1986) and Jones (1991) through the data model to validating corporate earnings management facts by accruals. The purpose of the fair value is relevant and fair reflection of the financial reporting information. But in times of financial crisis, companies are making use of the fair value measurement for earnings manipulation and earnings smoothing. Whether is it common earnings management behavior in the listed company? What is the relationship between fair value measurements and earnings management? How to regulate...
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