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The Impact of New Accounting Standards on Accounting-Based Valuation

Accounting-based valuation model is very popular in the world because of its sound theoretical basis and convenience for application. And the related theory continues to be developing. The valuation model has very mature application in deve
Submitted On: 04-01-2010 | Views:	Article Tools:

Accounting-based valuation model is very popular in the world because of its sound theoretical basis and convenience for application. And the related theory continues to be developing. The valuation model has very mature application in developed counties. However, the valuation model is still in its early stages in our country because of non-tradable shares, imperfect accounting system and so on. This article is designed to set up a number of comparison group to explore the model's explanatory power in our country and use new methods to improve it.The Ministry of Finance issued New Accounting Standards on February 15, 2006 and listed corporations had to implement them on January 1, 2007. Compared with Old Accounting Standards, New Accounting Standards made a lot of change and caused disputes. I found that all disputes are qualitative analysis, there has not been quantitative analysis ever since. Therefore, this paper is designed to do a quantitative study on New Accounting Standards and make a comparison of Old and New Accounting Standards from the point of view of value relevance and prudence. The results show that the value relevance of income changes little between Old and New Accounting Standards, and the value relevance of net assets per share under New Accounting Standards is lower than it under Old Accounting Standards. New Accounting Standards are more prudential than Old Accounting Standards.

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