Relationship between Financial Markets and Neoliberalism - PowerPoint Presentation Example

 In 2001 Accounting Standards for Business Enterprises (ASBE01) were introduced.
 In 2006 ASBE01 was restructured and named ASBE06.

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 In 2007 Chinese government decided to converge its national accounting standards with International Financial Reporting Standards.
 Its purpose was the development of the country’s economy and to improve its place in the world's increasingly integrated capital markets.

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Now we are going to discuss the relationship between financial markets and neoliberalism.s
 Neoliberalism or neoliberal transformations are the changes in the nature of both the public and private sectors….
 Market making is not a natural process, it is a contested political process ….

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• Fair value accounting and neoliberalism
“Fair Value Accounting” is an accounting method that forms part of the architecture of neoliberalism, embedding the broader ideological commitments of neoliberal globalization within accounting techniques.

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 Fair value accounting and financialization:-
Increased financialization has resulted in the creation of complex financial instruments, massive financial speculation…..

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We will see the results of the implementation of fair value accounting in china.
 The Chinese accounting standard –ASBE 22: Recognition and Measurement of Financial Instruments, which is equivalent to IAS 39: Financial Instruments, Recognition, and Measurement –has brought about the most significant changes to Chinese listed companies’ financial reporting since the introduction of the new CAS in 2007.
 This approach, as mediated through the ASBE 22, has led to huge volatilities in the reported profits of Chinese listed companies.
 Despite its technical limitations, we argue that the popularity of FVA lies elsewhere and can only really be understood when it is analyzed as part of the broader political economy of neoliberalism.

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Let’s have a glance over split Share Structure Reforms
 A policy of the Chinese government to “free” Chinese capital markets by transforming the share-ownership structure of Chinese listed companies and transforming non-tradable state shares into freely floating shares so that the markets could be “efficient”.

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Conclusion.
 Although FVA has not created the conditions of neoliberalism in China, it has sustained them.

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 In the Chinese context, FVA can only ever exist in the name – as a symbol of China’s commitment to global capitalism. To this end, China’s adoption of IFRS requires an embrace of so much more than comparable accounting techniques. It requires a commitment to the ongoing neoliberalisation of China that is disconnected from the underlying political and economic architecture that is operating within China. Read More