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

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.

Derivative Instruments on Emission Allowances: factors Influencing Disclosure in Portuguese Companies

“…In this sense, it seems to us that these companies will feel encouraged to disclose detailed information about their operations with derivative instruments, allowing the perception of the type of operations carried out, the strategies adopted in the management of the associated risks and the impact of these operations on the economic and financial situation of the company. The existence of an association between the level of disclosure on derivative instruments and the size of the company has been proven by several authors (Chalmers & Godfrey, 2004;Gope, 2017;Hassan et al, 2006;Kota & Charumathi, 2018;Lemos, 2011;Lemos et al, 2019;Leote et al, 2020;Lopes & Rodrigues, 2007;Ponte, 2019;Martins et al, 2020;Mir Fernández, Moreno & Olmeda, 2006).…”

“…Several studies have been developed with the intent to identify the determinants of derivates instruments in general (Chalmers & Godfrey, 2004;Gope, 2017;Hassan, Percy & Stewart, 2006;Kota & Charumathi, 2018;Lemos, 2011;Lemos, Serra & Barros, 2019;Leote, Pereira, Brites & Godinho, 2020;Lopes & Rodrigues, 2007;Ponte, 2019;Kota & Charumathi, 2018;Probohudono, Sugiharto & Arifah, 2019;Martins, Lemos & Serra, 2020;Mir Fernández, Moreno & Olmeda, 2006;Tahat, Mardini & Haddad, 2018). Nevertheless, as far as we are aware, prior research has not addressed the topic of derivatives on emission allowances disclosures, which highlights the contribution of this paper to the literature.…”

Disclosure Practices of Information in the Field of Financial Instruments: Evidence from Polish Companies Listed in the Warsaw Stock Exchange

“…Transparent financial statements are those that "disclose the events, transactions, judgments, and estimates underlying the statements, and their implications" (Pownall and Schipper, 1999). This detailed information is critical to ensuring that financial statements are prepared to reflect the true financial position of companies and help their users make more informed decisions (Adznan and Nelson, 2015;Leote et al, 2020).…”