Disclosure Of Financial Instruments Research Articles

Off - balance - sheet Information Disclosure of Listed Bank Derivative Financial Instruments

With China’s progressive multi-level capital market strategic direction, as well as the gradual implementation of the mixed operation of commercial banks. Derivative financial instruments will be further developed in commercial banks. This paper focuses on the information disclosure of derivative financial instruments by commercial banks, combined with the standard of disclosure of off-balance-sheet information of international derivative financial instruments, using the disclosure index and project disclosure ratio to analyze the disclosure of derivative financial instruments of listed banks in our country, Off-balance sheet information disclosure, and puts forward suggestions on how to further improve the quality of off-balance-sheet information disclosure of derivative financial instruments in China.

The Influence of the Board of Directors and the Auditor in the Disclosure of Derivative Financial Instruments: Evidence on Portuguese Capital Market

Purpose: This article aims to analyze the influence of certain characteristics of the board of directors and the auditor on the disclosure of derivative financial instruments. Theoretical framework: Operations with derivative instruments are associated with high risks, so the disclosure of these operations and their results helps to reduce information asymmetries. On the other hand, acccording to agency theory, the characteristics of the board of directors and of the auditor can affect the quality and the level of financial information disclosed. Design/methodology/approach: The data were obtained through content analysis, considering the 2017 reports and accounts of 37 companies listed on Euronext Lisbon, through a disclosure index. Subsequently, a multiple linear regression model was developed to identify the determinants of the level of disclosure about derivative instruments. Findings: The results revealed that only the number of independent members on the board of directors, the auditor's gender, and the size of the entity influence the level of disclosure about derivative instruments. Research, Practical & Social implications: This study may be useful for regulators in setting disclosure requirements for derivative instruments and useful in companies' decision making in defining the members of the board and the auditor. Originality/value: It contributes to the literature on compliance with IFRS and contributes to the perception of the influence of certain characteristics associated with the board of directors and the auditor in the disclosure of derivative instruments.

Investors’ Responses on SOE’s Liquidity Risk Disclosures: Case of Indonesia

This study aims to examine the value relevance of liquidity risk disclosure of Indonesia listed state owned enterprises after Indonesia Statement of Financial Accounting Standard, Disclosure of Financial Instruments (Revised in 2010 and 2014). This study uses 20 Indonesia listed state owned enterprises during period of 2012-2017 or 115 firm years as final samples. Using panel data analysis, this study shows that liquidity risk disclosure is relevant information for investors in Indonesia stock exchange. Investors response differently on liquidity risk disclosure before and after the announcement windows period of financial reports. The main contribution of this is examining the value relevance of liquidity risk disclosure of Indonesia listed state owned enterprises.

Financial instruments disclosure: Do audit committee and audit quality matter?

This study was motivated by a dearth of empirical literature on the relationship between audit committee characteristics, audit quality and financial instruments disclosure of a developing country. From the Nigerian Stock Exchange, up to date records over the period of three years (that is, from 2016 to 2018) were sourced from the sample size of all the 20 commercial banks and selected 30 insurance companies. After considering the dual role of audit committee as monitors to shareholders wealth and advisors for transparent managerial action based on quality audit information, the empirical analysis which employs a generalised method of moment estimator (GMM) that account for endogeneity concerns (simultaneity, reverse causality and unobserved heterogeneity)indicate that, audit committee meeting frequency (log acm) and audit quality positively and significantly relates to financial instruments disclosure each at 5% level. This result indicates the incentivizing role of audit on the new regulation as it applies to financial institutions in Nigeria. Moreover, firm size (log fsize) is positively related to financial instruments disclosure at 5% level of significance. On the contrary, this study found no significant relationship existing amongst audit committee size and financial instruments disclosure and audit committee meeting frequency and financial instruments disclosure of financial institutions in Nigeria. The study’s implications in the Nigerian context have been discussed.

Empresas que usam derivativos para hedge conseguem uma redução do risco?

Este estudo se propôs a avaliar o impacto da utilização de derivativos para fins de proteção (hedge) no risco das companhias de capital aberto negociadas na Bolsa de Valores de São Paulo ([B]3). A partir de uma amostra composta por 359 empresas analisadas entre os anos de 2010 e 2017 e separadas entre usuárias e não usuárias de derivativos por meio de variável dummy, foi empregada a metodologia de regressão de dados em painéis, tendo como variável dependente o risco e como variáveis independentes o uso ou não de derivativos, o tamanho, a alavancagem, o book-to-market e a liquidez. Os resultados obtidos pelos modelos passaram por testes de robustez e indicaram, assim como era esperado, que o uso de derivativos para hedge está acompanhado de uma redução no risco das companhias, assim como verificado em países desenvolvidos. Diante disso, este estudo poderá auxiliar na compreensão dos reflexos do uso de derivativos antes das alterações implementadas pela norma que regulamenta a contabilização e a divulgação dos instrumentos financeiros derivativos (IFRS 9), que passou a vigorar em 1º de janeiro de 2018. Além disso, o estudo contribui para que os gestores de empresas percebam o impacto da adoção de políticas de hedge no mercado acionário.

Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies

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.

Impact of the disclosure of financial instruments in accordance with the requirements of IFRS 7 on the financial performance of banks: Evidence from Bahrain: أثر الإفصاح عن الأدوات المالية وفق متطلبات معيار الإبلاغ المالي الدولي رقم (7) على الأداء المالي للمصارف (دراسة تحليلية لعينة من المصارف العاملة في مملكة البحرين)

A key objective of the research is to determine the extent to which conventional Bahraini banks- the retail sector- comply with the requirements for disclosure of financial instruments in accordance with the requirements of IFRS 7, As well as measuring the impact of that compliance on the financial performance of those banks. The descriptive and analytical approach adopted In order to achieve these objectives. A survey questionnaire consisting of 27 paragraphs of IFRS 7 was used to identify the banks that comply with the requirements of that standard, and then to measure the impact of Bahraini banks' compliance with the requirements of the said standard on their financial performance. In order to analyze the data and test the hypotheses, the SPSS program was used. The most important results were: Bahraini conventional banks- retail sector- comply with the requirements of IFRS 7 and there is also an impact of the compliance of the Bahraini conventional banks –retail sector- on financial performance is measured by the rate of return on assets. Finally, the study recommended increasing the awareness of employees in conventional banks in the Kingdom of Bahrain of the importance of applying financial reporting standards including IFRS 7 and their impact on the financial performance of banks.

Complexity in accounting for derivatives

PurposeThe purpose of this study is to analyze the perception of accountants in relation to the complexity of accounting for financial instruments and in relation to the disclosure of financial instruments in annual reports. Both aspects are relevant for the external users, and for the firms’ internal management.Design/methodology/approachThe database comprises questionnaires answered by accountants from Brazil and Chile. Data were analyzed based on reliability statistics and multivariate regression analysis.FindingsThe main results indicate that accountants perceive the accounting for derivatives, hedge accounting, fair value measurement of financial instruments and the respective disclosure of these operations as a complex issue. These findings are interesting considering that there are detailed accounting standards relating to financial instruments.Research limitations/implicationsThe results indicate that education and gender affect the perception of complexity about accounting of derivatives.Practical implicationsFindings from this research show that accountants do perceive derivatives as complex items for accounting, particularly accounting for hedges.Social implicationsThe results can motivate some initiatives for training activities and for teaching academic content about financial instruments in undergraduate courses.Originality/valueTo the best of the authors’ knowledge, this is the first study that tests some personal characteristics of accountants (namely, professional experience, education and gender), in contrast to their perceptions about complexity of accounting for derivatives.

Do Risk Disclosures Relating to the Use of Financial Instruments Matter? Evidence from the Australian Metals and Mining Sector

This paper investigates the value relevance of risk disclosures relating to the use of financial instruments in the Australian metals and mining sector. The metals and mining sector is the largest sector in Australia by the number of companies and includes several of the world’s largest diversified resource producers. Using a manually constructed disclosure index based on AASB 7 Financial Instruments: Disclosures, we find that financial instrument-related risk disclosures provide useful information to equity investors. In terms of individual risk category, liquidity risk is shown to be the most informative risk disclosure. We contribute to a stream of the literature examining the informativeness of risk disclosures. The results of this study have implications for several stakeholders regarding the quality assessment of risk reporting. In addition, the findings are of interest to standard setters since further regulatory changes are under consideration to improve the presentation and disclosure of financial instruments.

Penglibatan Golongan Bukan Islam dalam Amalan Wakaf Demi Pembangunan Negara, Menurut Perspektif Syariah

Waqf's legislation in Islam not only brings the well-being of the hereafter with the endurance of the reward for the deceased after the demised of a person, but it also brings prosperity in the person’s life. The benefits and advantages of this practice in the world are not only achieved by the Muslim community, but it can also be obtained and used by non-Muslims. However, the disclosure of Islamic financial instruments is rarely exposed to non-Muslims or virtually none. This is likely to be attributed to the Muslim community's stereotypical thinking that the practice of Islam and its fulfillment is only for the ummah of Islam alone or because of the belief, seeking the help of non-Muslims is strictly forbidden or for believing the property of non-Muslims should be illegal and should not be used by Muslims. The objective of this paper is to see how far non-Muslims are allowed to participate in wakaf or involved in wakaf. The author will look at the texts of the previous scholars and compare them before comparing which views is the best to be suggested as opinions to be use and applied in today's context. The results of this study suggest that non-Muslims are permitted to wakaf so that the atmosphere of helping in society is felt and enjoyed together and this truth is not considered to be in the prohibitions for asking the assistance from non-Muslims.

Fair value hierarchy in financial instruments disclosure - do audit committee and internal audit matter

This paper investigates the influence of audit committee (AC) and internal audit (IA) on fair value hierarchy (FVH) in financial instruments disclosure under the amendments made in March 2009 to IFRS 7 in Mauritius. Specific data on FVH was collected from the annual reports of the top 30 listed companies for the period 2010-2013. A disclosure index was then constructed, and the impact of AC and IA is investigated. Banks and insurance companies still need to improve the disclosure of FVH (particularly level 3 hierarchies) by 20%-25%. The existence of AC and the competence of its member(s) are statistically significant whereas its independence is moderately significant. The presence of IA function is positive but moderately significant whereas independence and competence are positively related but insignificant. This paper informs regulator(s), practicing accountants/auditors and professional associations on the effective influence of AC and IA on disclosure practices of FVH in financial instruments.

Fair value hierarchy in financial instruments disclosure - do audit committee and internal audit matter

Fair value hierarchy in financial instruments disclosure - do audit committee and internal audit matter

The Influence of corporate governance, audit quality, and ownership, on financial instrument disclosure in Indonesia

This research analyzed the influence of corporate governance, audit quality, public ownership, and foreign ownership, on financial instrument disclosure by Indonesian firms. Leverage, ROA, and size were used as control variables. The sample comprised of 71 manufacturing firms, determined using a purposive sampling method. Observational data for the years 2009-2013, are in the transition period of International Financial Reporting Standards implementation. Analyze data using multiple regressions. Test results show simultaneously, the scores of independent and control variable have positive influence. The results of partial testing of corporate governance, audit quality, public ownership, and foreign ownership scores have significantly positive influence.

Revelaciones de instrumentos financieros: cumplimiento con la implementación de NIIF en Colombia

En Colombia con la implementación de las NIIF, se esperan cambios en cuanto a reconocimiento, medición y sobre todo las revelaciones de los elementos de los estados financieros y especialmente, de los Instrumentos Financieros (en adelante IF). Este trabajo busca recopilar las diferentes variables de medición de los IF y observar el nivel de cumplimiento de las revelaciones de NIIF 7 de los IF, cuyo modelo de negocio permita medirlos a costo amortizado. Para lograr este objetivo, verificamos las revelaciones contenidas en los Estados Financieros de 55 empresas no financieras de Colombia. Como principales resultados se identifica que las empresas cumplen las revelaciones asociadas a los riesgos de crédito, mercado y de liquidez de los IF y con las revelaciones generales de la norma, sin embargo, hay deficiencias en cuanto a revelaciones sobre los elementos del costo amortizado y sobre el deterioro.

A longitudinal analysis of financial instruments disclosure in an emerging capital market: the case of Qatar

This study explores the extent of financial instruments (FI) information that is supplied by Qatari listed companies under International Accounting Standards (IAS) 30, IAS 32 and International Financial Reporting Standards (IFRS) 7 for the period between 2005 and 2012. The study adopts the unweighted disclosure approach to measure the extent of FI-related information provided by a sample of 282 Qatari firm observations between 2005 and 2012. The results of the study indicate that the implementation of IFRS 7 statistically improved FI-related information. Specifically, the quantity of FI disclosure rose from 24% in 2005 (under IAS 30/32) to greater than 28% in 2007 (under IFRS 7) and this rise was sustained, reaching 47% in 2012. Also, the results of the study reveal that the level of FI disclosure varies among companies by year, category of information and industry type. The current paper provides a great insight into the accounting profession and is of interest to both national (Qatari) and international accounting regulators regarding the implications of applying IFRS 7 in an emerging capital market.

A longitudinal analysis of financial instruments disclosure in an emerging capital market: the case of Qatar

This study explores the extent of financial instruments (FI) information that is supplied by Qatari listed companies under International Accounting Standards (IAS) 30, IAS 32 and International Financial Reporting Standards (IFRS) 7 for the period between 2005 and 2012. The study adopts the unweighted disclosure approach to measure the extent of FI-related information provided by a sample of 282 Qatari firm observations between 2005 and 2012. The results of the study indicate that the implementation of IFRS 7 statistically improved FI-related information. Specifically, the quantity of FI disclosure rose from 24% in 2005 (under IAS 30/32) to greater than 28% in 2007 (under IFRS 7) and this rise was sustained, reaching 47% in 2012. Also, the results of the study reveal that the level of FI disclosure varies among companies by year, category of information and industry type. The current paper provides a great insight into the accounting profession and is of interest to both national (Qatari) and international accounting regulators regarding the implications of applying IFRS 7 in an emerging capital market.

Disclosure of financial instruments: Practices and challenges of Latin American firms from the mining industry

In this paper, we analyze the disclosure level of financial instruments provided by companies of the mining industry, located in Latin America region. The sample is comprised of 72 firms from Brazil, Chile, Peru and Mexico. The main results indicate that companies located in Mexico provide the higher levels of disclosure both for IFRS-07 and for IFRS-09 requirements. The size of firms is also a variable that affects disclosure. We also build a panorama regarding some challenges for firms to disclose full information following IFRS-09. Furthermore, the results of this paper indicate that companies should use the potential benefits of Internet and disclosure more information regarding financial instruments.

ANALISIS KEPATUHAN PT BANK RAKYAT INDONESIA (PERSERO) Tbk PADA REVISI PSAK 60

Statement of Financial Accounting Standards (SFAS) 60 adjustment in 2014 is a standard that governs the disclosure of financial instruments. This greatly affects the standard of disclosure of details of banking information Indonesia on financial assets in the financial statements, as the industry is highly regulated, allegedly the level of compliance of the Bank Rakyat Indonesia (BRI) to implement the standard was high. Financial assets consist of available-for-sale, held to maturity, loans and receivables, and financial assets at fair value through profit or loss. This study aimed to see if the BRI bank disclose financial assets in accordance with SFAS No. 60 adjustment, 2014. The research method is descriptive qualitative. The results showed BRI bank in the disclosure of their financial assets in accordance with SFAS No. 60 adjustment in 2014 but the management did not express because the default has been completed and the loan terms have been renegotiated before the end of the reporting period. Bank BRI to apply IAS 60 and keep abreast of revisions in accordance with the specified standard. So that transparency in the disclosure of financial statements BRI clearer and can build higher trust of our customers and shareholdersKeywords : bank,disclosure, financial instrument

Análisis de los determinantes de revelación de instrumentos financieros mediante el uso de componentes principales: el caso de empresas mexicanas

El propósito de esta investigación es identificar las principales características que determinan el nivel de cumplimiento de la IFRS 7 (Instrumentos financieros: información a revelar) para un conjunto de empresas mexicanas. Con la técnica de componentes principales para medir el índice de revelación de las empresas, los resultados econométricos destacan que el tipo de auditor, el nivel de multinacionalidad y, en menor medida, el tamaño de las empresas son los determinantes clave para que las empresas cumplan la norma internacional de información financierarelativa a la revelación de instrumentos financieros. Estos hallazgos son consistentes con los obtenidos con métodos previos para medir el índice de revelación, lo que genera robustez y consistencia a nuestros resultados.

Factors affecting financial instruments disclosure in emerging economies: the case of Jordan

The current study investigates factors affecting financial instruments (FI) disclosure for a sample of Jordanian listed companies (82 firms) over two consecutive years (2013 and 2014). An un-weighted disclosure index is used to examine the extent of FI disclosure. In addition, the study employs a number of multiple regression models to examine the determinants of FI disclosure. The findings indicate that the level of FI disclosure provided by the sample firms is relatively low with only 52% of FI-related items being supplied. In addition, the results illustrate that the level of FI-related disclosure has a statistically positive association with firm size, the audit firm employed and corporate governance attributes. However, the current study fails to document significant associations between FI disclosure and firm industry or ownership structure variables. This research provides a number of insights for policy makers. First, the results of the current study could help the IASB when revisiting FI-related accounting standards to consider an emerging country's perspective. In addition, it provides some insights to accounting regulators in Jordan about how Jordanian listed firms respond to IFRS 7 requirements.