IFRS 7 Disclosures and Risk Perception of Financial Instruments

Are Level 3 Fair Values Reflected in Firm Value? Evidence from European Banks

“…As far as IFRS are concerned, IAS 39 distinguishes between five different measurement categories, of which only the categories held-for-trading (HfT), 8 fair value option (FVO) and available-for-sale (AfS) are measured at fair value. In an experimental setting, Bischof and Ebert (2014) provide evidence that the category under which a financial instrument is presented under IAS 39 influences the risk perception of individual investors. In particular, they find that a financial product labeled as FVO is perceived as signaling a greater risk compared to an identical investment presented e.g.…”

“…This corresponds to the classification proposed by IAS 39, except for the fact that we split trading derivatives from other trading instruments because they may be perceived differently by investors (e.g. Bischof and Ebert, 2014) and add them to the hedging derivatives in a separate product group 'derivatives' (D) due to their instrument-specific characteristics. 15 Also, this makes our results more readily comparable to prior studies that focus solely on derivatives.…”

The scope of disclosures of fair value measurement methods of financial instruments in financial statements of banks listed on the Warsaw Stock Exchange

“…The scientific literature review has shown that researchers have considered the term of fair value disclosure from different perspectives, due to the fact that this term still remains a vast subject in the scientific environment. The non-Polish scientists have focused on theoretical and regulatory presentation within empirical research of this issue in the terms of: first adoption of IFRS 7, value relevance of the fair value hierarchy, effect of IFRS 7 disclosure on investor's risk perception or disclosure of financial instruments [Bosch 2012;Bischof 2009;Bischof, Ebert 2014;Birt, Rankin, Song 2013]. Polish scientists mostly perform the term of fair value disclosure in the range of regulatory changes and compliance with IFRS, based on the theoretical approach, not on researching [Gierusz 2010;Świderska (ed.)…”