Deriatives disclosure in corporate annual reports: bank analysts; perceptions of usefulness

Bean, Anne & Irvine, Helen J. (2015) Deriatives disclosure in corporate annual reports: bank analysts; perceptions of usefulness. Accounting and Business Research, 45(5), pp. 602-619.

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Abstract

Responding to mixed evidence on the decision-usefulness of annual report disclosures for derivative financial instruments to capital market participants, and concerns identified by practice, this paper examines usefulness in a direct study of user perceptions. Interviews with analysts from Australia’s four major banks reveal essential usefulness, limited by the disclosures’ failure to reflect companies’ actual use of derivatives throughout the period, and inability of users to understand companies’ off-balance sheet risk and risk management practices from information considered generic and boilerplate. The research complements and extends existing archival and survey research and provides new evidence suggesting low-cost ways for increasing usefulness. It supports the International Accounting Standards Board’s disclosure recommendations in its recent Discussion Paper: A Review of the Conceptual Framework for Financial Reporting, but, at the same time, highlights that for these proposed measures to be successful in relation to IFRS 7, they may need to address other issues. The research increases knowledge of the informational requirements of lenders, an important class of financial information user, and supports calls from practice for companies to improve their disclosure of material economic risks.

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ID Code: 91018
Item Type: Journal Article
Refereed: Yes
Keywords: derivatives, IFRS 7, risk, disclosure, lenders, users
DOI: 10.1080/00014788.2015.1059312
ISSN: 2159-4260 (online)
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > ACCOUNTING AUDITING AND ACCOUNTABILITY (150100)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Accountancy
Deposited On: 04 Dec 2015 05:29
Last Modified: 16 Apr 2016 12:14

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