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

The debate on fair value accounting is still open although the last 20 years have been spent in looking for solutions by academics, practitioners and institutions. After long and continuous discussion both on the basic concepts and the information level contained in fair value measurements and on the different solutions that are possible to adopt in mark to market measurements, IASB and FASB have recently issued new standards on fair value measurements applying some principles not only to financial instruments but also to property and other investments. To verify if the solutions adopted in these Standards really improve the disclosure level and the “usefulness of data for investors”, this paper analyzes the actual level of transparency and the “usefulness” of the “fair value hierarchy” (which from some points of view synthesized the Board’s way of thinking regarding to fair value) which has already been introduced for financial instruments by IFRS 7, Financial Instruments: Disclosure. The paper presents results of an empirical investigation on a sample of domestic and foreign listed banks that adopted fair value hierarchy in line with SFAS 157 and IFRS 7 recommendations. Research questions can be summarized as follows: (i) does fair value hierarchy improve transparency in financial instrument evaluation in bank annual reports, or can it be considered as a tool for earnings management?

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IFRS 7 Financial Instruments: Disclosures

IFRS Essentials ◽

10.1002/9781119207917.ch37 ◽

2015 ◽

pp. 445-449 ◽

Cited By ~ 1

Keyword(s):

Financial Instruments ◽

Ifrs 7

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

Accounting Research Journal ◽

10.1108/arj-08-2013-0055 ◽

2016 ◽

Vol 29 (3) ◽

pp. 241-273 ◽

Cited By ~ 8

Author(s):

Yasean A. Tahat ◽

Theresa Dunne ◽

Suzanne Fifield ◽

David M. Power

Keyword(s):

Balance Sheet ◽

Accounting Standards ◽

Fair Value ◽

Listed Companies ◽

International Accounting ◽

International Accounting Standards ◽

Financial Instruments ◽

Content Type ◽

Ifrs 7 ◽

The Impact

Purpose The main aim of this paper is to investigate Financial Instruments (FIs) disclosures provided by Jordanian listed companies under International Financial Reporting Standard No. 7 (IFRS 7) as compared to those supplied under International Accounting Standards (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 per cent of the disclosure index items after implementing IFRS 7 as compared to 30 per cent under IAS 30/32. In addition, the industrial analysis of FI disclosure revealed that the highest level of disclosure was provided by firms in the banking sector over the two periods; these companies disclosed 44 per cent of FI-related items pre-IFRS 7 and 69 per cent of items post-IFRS 7. Moreover, the industrial analysis of FI disclosure pre-and post-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 provide timely findings to Jordanian authorities who may be trying to evaluate the current reforms adopted; stringent enforcement mechanisms are needed to ensure full compliance with accounting standards. However, the present investigation was conducted on a single nation (Jordan); the circumstances in Jordan gave rise to the importance of the current study. A cross-country comparative analysis is needed in order to examine the application of IFRS 7 in a developing country context. Practical implications The results of the current study have a number of implications for policymakers. First, they provide a great deal of insight for the International Accounting Standards Board about the relevance of its standards to countries outside the Western context. In addition, the findings provide valuable insights for policymakers 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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Fair value accounting en toepassing van de fair value-hiërarchie door een populatie van Europese banken

Maandblad Voor Accountancy en Bedrijfseconomie ◽

10.5117/mab.85.10896 ◽

2011 ◽

Vol 85 (1) ◽

pp. 64-79

Author(s):

Bert-Jan Bout ◽

Ralph Ter Hoeven

Keyword(s):

Best Practices ◽

Fair Value ◽

Financial Instruments ◽

Fair Value Accounting ◽

Ifrs 7 ◽

Level 1

In deze bijdrage wordt onderzocht in hoeverre de populatie banken binnen de ‘FTSE Eurofirst 300’-index voldoet aan de voorschriften van het in maart 2009 gepubliceerde IFRS 7-amendement ‘Improving disclosures about financial instruments’. Dit amendement bepaalt met name dat tegen fair value gewaardeerde financiële instrumenten op grond van een fair value-hiërarchie (level 1, 2, 3) moeten worden geclassificeerd. Tevens dienen specifieke toelichtingen met betrekking tot deze hiërarchie gegeven te worden. De hiërarchie die in het licht van de kredietcrisis versneld in IFRS 7 is opgenomen, dient de gebruiker van de jaarrekening beter inzicht te geven in de waarderingsmethodiek en inherente onzekerheid van respectievelijk op fair value gewaardeerde financiële activa en financiële verplichtingen. Naast het empirisch jaarrekeningonderzoek met betrekking tot de kwaliteit van naleving van de voorschriften, worden vermeldenswaardige toelichtingen en best practices gepresenteerd en van commentaar voorzien. Voorafgaand aan het empirisch onderzoek wordt de inhoud van het amendement besproken. Deze bijdrage wordt afgesloten met een nabeschouwing inclusief aanbevelingen.

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Determinants of financial instruments risk disclosure: An empirical analysis in the banking sector

Corporate Ownership and Control ◽

10.22495/cocv17i2art2 ◽

2020 ◽

Vol 17 (2) ◽

pp. 20-31

Author(s):

Alessandra Allini ◽

Luca Ferri ◽

Marco Maffei ◽

Annamaria Zampella

Keyword(s):

Banking Sector ◽

Banking System ◽

Optimal Level ◽

Financial Instruments ◽

Risk Disclosure ◽

Country Factors ◽

Ifrs 7 ◽

European Banking ◽

Country Selection ◽

The Uk

This study investigates the effects of firm and country factors, considered as determinants of the financial instruments risk disclosure (FIRD) proxied by IFRS 7 in the European banking system. We select 582 banks-year observations based on the largest five European economies (France, Germany, Italy, Spain and the UK) as provided by the International Monetary Fund (IMF). Our analysis covers a period of 8 years (2007-2014) and adopts an OLS model. Results show that both firm (the type of auditor, board size and profitability) and country factors (financing environment, regulatory environment, and organizational status) affect FIRD. Limitations for this paper could relate to country selection, as well as on the breadth of the sample. Nevertheless, these aspects could unveil possible areas of future inquiry. The contribution of the study is twofold. It enriches the literature about firm and country determinants on financial instruments risk disclosure, as combined rather than single-standing variables. Yet, it draws the attention of banks’ management and investors on what the crucial factors to reach an optimal level of FIRD are and gain the confidence of capital markets, reducing information asymmetries. This is the first empirical investigation on the determinants of FIRD, using IFRS 7, in the European banking sector that adopts firm and country factors in a combined effort.

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IFRS 7 Disclosures and Risk Perception of Financial Instruments

Schmalenbach Business Review ◽

10.1007/bf03396908 ◽

2014 ◽

Vol 66 (3) ◽

pp. 276-308

Author(s):

Jannis Bischof ◽

Michael Ebert

Keyword(s):

Risk Perception ◽

Financial Instruments ◽

Ifrs 7

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Risk Disclosure and Firm Value: Evidence from the United Kingdom

Central European Economic Journal ◽

10.2478/ceej-2021-0002 ◽

2021 ◽

Vol 8 (55) ◽

pp. 15-24

Author(s):

Tache Marta

Keyword(s):

United Kingdom ◽

Financial Reporting ◽

Firm Value ◽

Quantitative Information ◽

Financial Instruments ◽

Risk Disclosure ◽

Listed Firms ◽

Ifrs 7 ◽

Using Data ◽

Risk Disclosures

Abstract The International Accounting Standard Board (IASB) aimed to increase the decision usefulness of firms’ risk disclosures with the 2007 introduction of the International Financial Reporting Standards (IFRS) 7. Specifically, listed firms were mandated to provide information to the market on both their (1) exposure and (2) risk management, which are associated with holding their financial instruments. This study investigates whether IFRS 7 financial instruments and their disclosures are associated with firm valuation. Using data on premiumlisted United Kingdom (UK) companies, for the period 2007–2019, I find evidence that firm value (proxied by Tobin's Q) is negatively associated with the quantity of IFRS 7 interest and credit risk disclosures. I further find that the market value decreases with the presence of quantitative information tabulated in the disclosures. The findings of this study have important implications for the IASB's standard-setting process.

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