The Introduction of Derivatives Reporting in the Uk: A Content Analysis of FRS 13 Disclosures

Dunne, Theresa; Helliar, Christine; Power, David; Mallin, Christine; Ow-Yong, Kean; Moir, Lance

doi:10.1142/s0219868104000166

Cited by 24 publications

(28 citation statements)

References 18 publications

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“…Content analysis 9 FRS 13 Banking Dunne et al (2004) Recognised gains/losses on hedge ineffectiveness associated with FI* New 22…”

Section: Panel B: Studies On Fi Disclosure Standards In the Ukmentioning

confidence: 99%

“…In conclusion, the general findings of the extant FI-related disclosure literature indicate that the introduction of new accounting standards have resulted in: (i) an increase in the number of companies supplying FI disclosure (Edwards and Eller, 1995;Chalmers and Godfrey, 2004;Chalmers, 2001;Hassan et al, 2006b); and (ii) an improvement in the level of corporate FI disclosure provided (Roulstone, 1999;Chalmers and Godfrey, 2000;Chalmers, 2001;Dunne et al, 2004;Woods and Marginson, 2004;Hamlen and Largay, 2005;Lopes and Rodrigues, 2006;Strouhal, 2009;Murcia and Santos, 2010).…”

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confidence: 98%

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The impact of IFRS 7 on the significance of financial instruments disclosure

Tahat

Dunne

Fifield

et al. 2016

ARJ

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Purpose -The main aim of this paper is to investigate Financial Instrument (FI) disclosures provided by Jordanian listed companies under IFRS 7 as compared to those supplied under IAS 30/32.Design/methodology/approach -A sample of 82 Jordanian listed companies is used in this monograph. A disclosure index checklist was constructed to measure FI information provided by the sample companies.Findings -The study finds that a larger number of Jordanian listed companies provided a greater level of FI-related information after IFRS 7 was implemented. Specifically, the sample firms provided 47% of the disclosure index items after implementing IFRS 7 as compared to 30% under IAS 30/32. In addition, an analysis of FI disclosure by industry revealed that the highest level of disclosure was provided by firms in the banking sector.Moreover, the analysis of FI disclosure pre-and post-the implementation of IFRS 7 revealed specific aspects of usefulness. In particular, some components of FI disclosure (Balance Sheet and Fair Value) showed no significant differences within and across sectors post the implementation of IFRS 7 suggesting that the new standard may have enhanced the comparability of such information. Research Limitations/implications -The results of the current study have a number of implications for policy-makers. First, they provide a great deal of insight for the IASB about the relevance of its standards to countries outside the Western context. In addition, 2 the findings provide valuable insights for policy-makers in Jordan who are concerned about the implications of mandatory disclosures.Originality/value -The analysis of FI disclosure in developing countries in general, and in Jordan in particular, has been overlooked by the extant literature and therefore this study is the first of its kind to examine this research issue for a sample of Jordanian firms.

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“…Content analysis 9 FRS 13 Banking Dunne et al (2004) Recognised gains/losses on hedge ineffectiveness associated with FI* New 22…”

Section: Panel B: Studies On Fi Disclosure Standards In the Ukmentioning

confidence: 99%

mentioning

confidence: 98%

The impact of IFRS 7 on the significance of financial instruments disclosure

Tahat

Dunne

Fifield

et al. 2016

ARJ

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“…Our analysis makes three important methodological contributions to the literature on the foreign exchange exposure of individual firms. First, we relax Jorion's (1990) assumption that foreign exchange exposure is constant over time.Several studies (Smith and Stulz, 1985;Allayannis and Weston, 2001;Dunne et al, 2004) show that a firm's exposure to exchange rate movements is related to firm-specific factors, such as size, liquidity, hedging activities and growth opportunities, which are expected to vary over time. We use GARCH-based two-factor asset pricing model with time varying coefficients (GARCH-TVC hereafter) to model the time varying nature of firms' exposure to currency movements.…”

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confidence: 99%

The foreign exchange exposure of UK non-financial firms: A comparison of market-based methodologies

Agyei‐Ampomah

Mazouz

Yin

2013

International Review of Financial Analysis

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We use a sample of 269 UK non-financial firms to study the sensitivity of foreign exchange exposure, and its determinants, to the different estimation methods. The standard Jorion's model suggests that 14.93% (30.50%) of the firms in our sample are exposed directly or indirectly to the fluctuations in the TWC (the US$, the Euro or the JP¥). However, the exposure increases substantially to 85.13% (96.65%) when time varying exposure regressions with orthogonalized market returns are used. We also show that the determinants of currency exposure are model-dependent. While the cross-sectional results suggest very little or no relationship between firm-specific factors and currency exposure, the explanatory power of these factors increase when data is pooled across firms and time. JEL Classifications: F31; F23Keywords: Foreign exchange exposure; Currency risk; Panel estimation 2 IntroductionSeveral studies predict that all firms should be subject to foreign exchange exposure as their cash flows are affected, directly or indirectly, by exchange rate movements (Shapiro, 1975;Heckman, 1985;Levi, 1994;Marston, 2001). In the light of this, it is puzzling why most empirical studies show that foreign exchange fluctuations have little or no impact on stock returns (Jorion, 1990;Bartov and Bodnar, 1994;El-Masry et al. 2007;Hutson and Stevenson, 2010).This study uses a sample of 269 UK non-financial firms to investigate whether the weak empirical association between exchange rate changes and stock returns can be attributed to bad model problems. Our analysis makes three important methodological contributions to the literature on the foreign exchange exposure of individual firms. First, we relax Jorion's (1990) assumption that foreign exchange exposure is constant over time.Several studies (Smith and Stulz, 1985;Allayannis and Weston, 2001;Dunne et al., 2004) show that a firm's exposure to exchange rate movements is related to firm-specific factors, such as size, liquidity, hedging activities and growth opportunities, which are expected to vary over time. We use GARCH-based two-factor asset pricing model with time varying coefficients (GARCH-TVC hereafter) to model the time varying nature of firms' exposure to currency movements. 1 Second, Priestley and degaard (2007) argue that the exposure coefficient obtained from Jorion's model does not capture the stock's total exposure to the foreign exchange movements. Instead, it only measures the stock's exposure over and above that of the market portfolio. Priestley and degaard (2007) suggest that orthogonalized, rather than actual, market returns should be used to estimate the exchange rate exposure. We improve on Priestley and degaard's (2007) methodology by allowing the coefficients and the residuals of the orthogonalized regressions to vary over time. Finally, previous studies use cross-sectional analysis to examine the determinants of the foreign exchange exposure.Although some of these determinants, such as industry, vary only across firms, others vary across firms a...

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“…In the UK, examining the effect of implementation of FRS 13 "Derivatives and Other Financial Instruments -Disclosures" on disclosure policies [1,10,11,25], there was found an increase in the quantity of information disclosed, even if still inadequate in satisfying the investors information need. In [3] focus on a sample of UK firms adopting IFRS 7 and point out the low transparency of financial statements regarding disclosure on the relevance of financial instruments and the nature and the amount of financial risks.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Risk Disclosure: Evidence From Albanian And Italian Companies

Dicuonzo¹,

Fusco²,

Dell’Atti³

2017

KSS

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In recent years standard setters, regulators and professional bodies worldwide have shown an increased interest in risk reporting. This has reflected the fallacy of the financial reporting model to communicate a company's risk profile, the recent scandals and the financial crisis. The European Union, the International Accounting Standards Board (IASB) and other national standard setters have introduced specific requirements in order to impose companies to highlight the principal financial risks and uncertainties that they face. The idea is that high-quality risk disclosure help investors and other market participants in their decision-making process, by providing a better understanding of the risk exposures and risk management practices of companies. Previous studies show large heterogeneity in risk reporting within individual countries and identify size as key determinant of risk disclosure. A few researches propose a cross-country investigation of risk reporting and to date there is a lack of evidence about companies operating in Southern Europe, especially in the Balkans. The aim of this study is twofold. First, we fill this gap by analyzing risk reporting regulations in Albania and in Italy to examine the different requirements. Second, we examine risk information disclosed by a sample of 12 Albanian companies and 12 Italian companies within their annual reports, using content analysis. Due to small sample size we offer preliminary findings about financial risk disclosure. The results show that on average Albanian companies disclose less information on financial risk than Italian companies. Different explanations can be given for this evidence: i) risk disclosure regulation is less incisive in Albania, because it is limited to inform investors about the relevance of financial instruments and the terms and conditions of loans; ii) Albanian companies have fewer incentives to disclose risk information than Italian companies.

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The Introduction of Derivatives Reporting in the Uk: A Content Analysis of FRS 13 Disclosures

Cited by 24 publications

References 18 publications

The impact of IFRS 7 on the significance of financial instruments disclosure

The impact of IFRS 7 on the significance of financial instruments disclosure

The foreign exchange exposure of UK non-financial firms: A comparison of market-based methodologies

Financial Risk Disclosure: Evidence From Albanian And Italian Companies

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