The Value Relevance of Consolidated Financial Statements：evidence from the revision of SFAS No. 7
碩士 === 國立臺灣大學 === 會計學研究所 === 96 === Accounting Research and Development Foundation of the Republic of China issued SFAS No.7 “Consolidated Financial Statements” in 1985 and the consolidation requirement is based on 50% ownership threshold. Regulations No.01395 was then issued in 1999 by Securities a...
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| Format: | Others |
| Language: | zh-TW |
| Published: |
2008
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| Online Access: | http://ndltd.ncl.edu.tw/handle/43540747650306238468 |
| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 96 === Accounting Research and Development Foundation of the Republic of China issued SFAS No.7 “Consolidated Financial Statements” in 1985 and the consolidation requirement is based on 50% ownership threshold. Regulations No.01395 was then issued in 1999 by Securities and Futures Commission, Ministry of Finance and the consolidation requirement is based on the fact that parent firms can exert significant control on subsidiaries, regardless of the size of ownership. SFAS No.7 “Consolidated Financial Statements” was revised in 2005 in that the consolidation requirement is based on the controlling nature rather than the ownership status. SFAS No.7 also abolishes the exemption rules that allow a parent firms not to consolidate subsidiaries under some circumstances even if the ownership (control) meets the consolidation requirements as suggested by old SFAS No.7 or Regulation No.01395.
This study uses Ohlson model to investigate the value relevance of parent and subsidiaries’ financial information in the past ten years. I find that the value relevance of consolidated statements increase with the passage of the three rules in the past ten years. This suggests that parent firms should consolidate subsidiaries based on the substance of controllability instead of the size of ownership to better align with economic consequences.
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