Abstract
The constant changes in the business context and international relations have led companies to be provided with financial reporting with useful information, including their relevance, comparability and harmonization as required by International Financial Reporting Standards (IFRS). This study analyzes the level of disclosure of derivative financial instruments from companies in the PSI20 stock index, in the Euronext Lisbon stock exchange, according to requirements of IRFS 7. A disclosure index was created, based on the reports and accounts of companies in the period 2015-2017. To analyze the evolution of the disclosure level according to companies’ characteristics (dimension, profitability, share price and auditor type), we applied a cluster analysis. The results show a high level of disclosure. This evidence may be related to the mandatory adoption of IAS / IFRS and may also reflect companies' greater concern in disclosing this type of information due to the negative impact that the global financial crisis has had on corporate performance in general. The dimension is the variable that affects disclosure. That is, there is a tendency to, the higher the company the higher the level of disclosure. However, the results show that smaller companies also have high levels of disclosure. This may be associated with greater or lesser quantity or value of derivative financial instruments used.
Highlights
Increasing relations at international level and constant business context change led companies to have financial statements with useful information, covering its comparability and harmonization, as required by international financial reporting standards (IFRS).In everyday life companies are exposed to the most diverse risks and most use financial instruments, derivatives, to minimize the impact.IFRS 7 [1] is the main instrument for this study
The main objective of the work is based on the analysis of information disclosure level about derivative financial instruments from companies belonging to the Euronext
Considering a significance level of 1%, the existence of a different correlation of zero between ID and the independent variable "Dimension"(p-value < 0.01) is concluded. These results show the existence of a positive relationship between size and information disclosure level on derivative financial instruments
Summary
Increasing relations at international level and constant business context change led companies to have financial statements with useful information, covering its comparability and harmonization, as required by international financial reporting standards (IFRS).In everyday life companies are exposed to the most diverse risks and most use financial instruments, derivatives, to minimize the impact.IFRS 7 [1] is the main instrument for this study. Increasing relations at international level and constant business context change led companies to have financial statements with useful information, covering its comparability and harmonization, as required by international financial reporting standards (IFRS). In everyday life companies are exposed to the most diverse risks and most use financial instruments, derivatives, to minimize the impact. IFRS 7 [1] is the main instrument for this study. This standard aims to increase the quality and quantity of information disclosed by companies. Lisbon stock index - PSI 20 (it’s a Portuguese Stock Index that brings together the twenty largest companies), during the period 2015-2017. This work aims to address the following question: “Do Portuguese companies meet the requirements of IFRS 7 about information disclosure on financial instruments?”
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