The System Guarantee Mechanism for the Reliability of Fair Value: Based on Game Theory

Decision usefulness of accounting information has two aspects: relevance and reliability. Fair value is undoubtedly better than the historical cost in relevance, but, suspected frequently in reliability. Technically, fair value accounting information can be both relevant and reasonably reliable. However, the production and disclosure of accounting information has never been a purely technical issue. Agent Theory, Corporate Contract Theory and Empirical Research findings have shown that executives have subjective motives to manipulate and distort accounting information to maximize their own interests. Considered the subjectivity of fair value measurement, a reasonable and effective safeguard mechanism is required to guarantee the reliability of Fair value accounting information. And empirical Researches have also suggested there were manipulation in the process of the development and disclosure of fair value accounting information as expected. Based on Game Theory, this paper tries to find an effective system mechanism to guarantee the reliability of fair value by embedding accounting firms into enterprise accounting system.