Fair Value Measurement Model for Investment Real Estate and Rationality of Management Compensation

Abstract

In this paper, I mainly investigate the relationship between the fair value measurement model for investment real estate and the rationality of management compensation, and further examine the correlation between the overall education background of a company’s management and the tend of them to introduce the fair value measurement model for investment real estate. I have conducted empirical studies using data from China’s A-share listed companies in Shanghai and Shenzhen stock markets that owned investment real estates from 2013 to 2018. Consistent with my hypotheses, I find that: (1) using fair value to measure investment real estate will reduce the rationality of management compensation; (2) the better the overall education background of a company's management is, the less inclined they are to use fair value to measure investment real estate.