Abstract
Accounting for financial instruments according to international standards is one of the most sophisticated tasks for standard setters and preparers. Existing empirical research on this topic is rare and mainly concentrates on industry or national situations. Therefore, further research and especially empirical studies are needed to get a better understanding of the recognition, measurement and disclosure of financial instruments. This paper provides current evidence on the practical relevance of financial assets and liabilities in European publicly traded companies listed in the STOXX Europe 600 for the fiscal year 2015. A content analysis shows that financial assets have a stronger importance in the financial industry as in the non-financial industry. We can also demonstrate that a fair value measurement for financial assets and liabilities is only important for the financial industry, while the average usage in the non-financial industry is marginal. Moreover, the critical level 3 fair value, which is based on unobservable data, has only a very low importance in both industries. The often mentioned critique that fair values are not objective and not verifiable is, therefore, unfounded. Surprisingly, we identified substantial problems in the disclosure quality of financial assets and liabilities’ data in the notes which cannot be explained by company specific variables. Especially this finding demonstrates that the comparability of financial statements is not always given and does not improve the usefulness for the various stakeholders and their investment decisions. Researchers are invited to conduct additional studies for other periods and samples which can be helpful to gain further insights as well as to improve the current disclosure shortcomings.
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