Ye, Rui ORCID: https://orcid.org/0000-0002-9366-648X, Heravi, Saeed and Xiao, Jason (2023) Market institutions, fair value, and financial analyst forecast accuracy. Abacus: A Journal of Accounting, Finance and Business Studies, 60 (1). pp. 130-171. ISSN 0001-3072 (Print), 1467-6281 (Online) (doi:10.1111/ABAC.12310)

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Abstract

This study investigates the valuation usefulness of fair values and related information disclosure in China and examines how regional-level market institutions influence the valuation usefulness of fair value information. Based on a sample of Chinese listed companies during 2007 to 2016, the empirical results show a negative association between overall fair values and analyst forecast accuracy. Further analyses suggest that the negative association is likely driven by biases and/or errors in fair value estimates. Using a difference-in-difference research design, the study also documents that the implementation of ASBE 39 in 2014 has improved the valuation usefulness of fair values. There is evidence that different aspects of market institutions—including the extent of government intervention in the market and the legal environment—influence analysts’ use of fair value information. This study contributes to the literature by providing new and different evidence on the usefulness of fair values to financial analysts outside developed countries. Moreover, by taking advantage of the uneven institutional development across China, the study shows that different aspects of market institutions influence the valuation usefulness of fair value information.

Item Type:	Article
Uncontrolled Keywords:	China, fair value hierarchy, financial analyst forecast properties, information disclosure, market institutions, regional institutions
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Faculty / School / Research Centre / Research Group:	Greenwich Business School Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) Greenwich Business School > School of Accounting, Finance and Economics Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) > Centre for Governance, Risk and Accountability (CGRA)
Last Modified:	09 Dec 2024 12:12
URI:	http://gala.gre.ac.uk/id/eprint/47981

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