The Survey of the Fair Value as a Relevant Metric in Iran

Authors

1 Professor of Accounting, Alzahra University, Tehran, Iran.

2 M.A. of Accounting, Alzahra University, Tehran, Iran.

Abstract

     The major aim of the financial accounting is providing and offering information of performance and financial position of the enterprise against external users in order to facilitate and improve their decision making.To reach this aim, the financial information should have the two factors of relevance and reliability. But these two essential factors are opposite to each others. Theoretically, increase in the relevance level leads to decrease in the reliability level. In practice, this opposition gets explicit when historical cost accounting is compared with fair value accounting. This research investigated fair value as a relevant metric in stockholder's decision making. Then by using the review of the literature and the results of the previous researches, related questionnaire was designed and necessary information was collected. The statistical community of the research involved the main group of financial statement's users that means stockholders. Hypotheses were tested by using T-test and Chi-Square method. The results showed that there is a significant relation between the fair value changes and the share price changes. Also, fair value has a significant role in predicting the value of a firm.

Keywords

References

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Journal of Development and Capital
Volume 1, Issue 2 - Serial Number 2
January 2009
Pages 71-101

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History

  • Receive Date: 12 February 2008
  • Revise Date: 07 July 2008
  • Accept Date: 15 September 2008

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