NDLI: Accounting quality: Choosing fair value versus historical cost

Content Provider	IEEE Xplore Digital Library
Author	Chen Chen
Copyright Year	2011
Description	Author affiliation: School of Management, China University of Mining and Technology, P.R. China, 221116 (Chen Chen)
Abstract	This paper compares accounting quality metrics for real estate firms to investigate whether the choice of investment property measurement model is associated with earnings management and lower value relevance. We examine the different accounting quality levels of different real estate firms which are classified by investment property measurement under China's new accounting standards from 2007 to 2009. We hypothesize and find evidence that the fair value firms have lower variance of change in net income, lower ratio of the variance of change in net income and change in cash flows, higher frequency of small positive net income, and lower value relevance. The empirical results indicate that real estate firms which adopt fair value model to measure investment property have lower accounting quality than other real estate firms. We also find that no fair value firm report negative net income. Overall, our results suggest that the adoption of fair value model should be considered carefully especially under China's special market background.
Starting Page	890
Ending Page	895
File Size	112460
Page Count	6
File Format	PDF
ISBN	9781457718854
ISSN	21551855
e-ISBN	9781457718885
DOI	10.1109/ICMSE.2011.6070065
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2011-09-13
Publisher Place	Italy
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Measurement Correlation accounting quality earnings management Investments Companies value relevance Mathematical model Equations Standards historical cost model fair value model
Content Type	Text
Resource Type	Article

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