Derivatives reporting
: the implications of recent accounting standards for corporate governance and accountability

    Student thesis: Doctoral ThesisDoctor of Philosophy


    This dissertation investigates the implementation of FRS 13 by UK non-financial companies, and assesses the impact of the Standard on both users and preparers of Annual Reports. The investigation involves (i) a content analysis of the reporting practices of companies on their derivatives usage before and after the introduction of FRS 13. in order to ascertain whether the standard had any significant effect on the contents of company financial statements, and (ii) interviews with both the preparers (treasurers) and the users (fund managers) of the information provided under FRS 13, in order to facilitate an understanding of the implications of the standard for their operations. The study focuses in particular on the effects of the increased derivatives-related disclosures for corporate governance structures and accountability relationships The results suggest that the amount of disclosure in company annual reports increased significantly following the introduction of the standard; companies were now disclosing far more about their hedging and risk management activity than they had before. In general, treasurers responded favourably to the standard, and considered the narrative disclosures to be particularly useful. The numerical disclosures were considered to be very detailed and specialised; interviewees thought that users might have difficulty in understanding them. However, the implementation of lAS 39, which will be mandatory for all EU companies from 2005, was causing treasurers far more concern. Many treasurers expected to purchase expensive new systems and establish sophisticated procedures in order to comply with the hedge accounting rules of lAS 39. In general, the institutional investors interviewed expressed similar views to those of the treasurers; they found the narrative parts of the annual reports useful, but agreed that the numerical disc losures were too specialised. The investors thought that the disclosures did improve the corporate governance process and highlighted issues that they wished to raise with their investee companies' management as a result of the information gleaned from the financial statements.
    Date of Award2003
    Original languageEnglish
    SupervisorChristine Helliar (Supervisor) & David Power (Supervisor)

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