Relevance between the degree of industrial competition and fair value information: study on the listed companies in China

摘要

Purpose: The purpose of this article is to study whether there exists natural relationship\udbetween fair value and corporate external market. A series of special phenomenon in the\udapplication of fair value arouses our research interests, which present evidences on how\udcompetition affects the correlation of fair value information.\udDesign/methodology/approach: this thesis chooses fair value changes gains and losses and\udcalculate the ratio of DFVPSit as the alternative variable of the fair value. In order to effectively\udinspect the mutual influence between the degree of industry competition and the value\udrelevance of fair value, and reduce the impact of multi-collinearity, we built a regression model\udon the hypothesis, which supposes that if other conditions are the same, the fair value\udinformation has greater value relevance if the degree of the industry competition is greater. To\udtest the hypothesis, we use the comparison of the DFVPSit coefficient absolute value to judge\udthe value relevance of fair value information, and the greater the absolute value is, the higher\udrelevance between the changes in fair value per share profits and losses with the stock prices.\udFindings: The higher the degree of competition in the industry is, the more fair value\udinformation relevance is. Also, there are evidences representing that fair value information\udoften presents negative correlation with the stock price.Originality/value: The main contribution of the article is to show that not only need we make\udthe formulation and implementation of the high quality of fair value accounting standards to\udsuit for both the national conditions and international practice, but also need we further to\udimprove the company's external governance mechanism to promote fair value’s information\udcorrelation.