Empirical Research on the Value Relevance of Fair Value Hierarchy Information of China's Financial Industry

This paper studies the value relevance of fair value hierarchy information based on data of the banking industry and insurance industries in China from 2007 to 2012. What we find out is that fair value information has its value relevance on the whole, and with the decrease of fair value hierarchy, the value relevance of fair value assets decreases gradually while the value relevance of financial liabilities shows no significant difference. A forward investigation on the value relevance in different information environments demonstrates higher information transparency and richness can promote the value relevance of fair value in level 3, and a bad information environment impairs the value relevance of fair value liabilities. The findings in this paper support the claim fair value hierarchy information has its value relevance, which can provide empirical evidences for emerging countries under transition phase and for Chinese Accounting Standards No. 39-Fair Value Measurement.