Hedging and Hedge Accounting in a Multiperiod World: A Cash Flow-Centered View

Market Pricing of SFAS 133 Cash Flow Hedge Accounting and U.S. Multinationals' Derivatives Use

SSRN Electronic Journal ◽

10.2139/ssrn.1266786 ◽

2008 ◽

Author(s):

Stephen D. Makar ◽

Li Wang ◽

Pervaiz Alam

Keyword(s):

Cash Flow ◽

Market Pricing ◽

Hedge Accounting ◽

Sfas 133

Accounting for Derivatives and Hedging Activities: Comparison of Cash Flow versus Fair Value Hedge Accounting

Issues in Accounting Education ◽

10.2308/tnae.2008.23.1.13 ◽

2008 ◽

Vol 23 (1) ◽

pp. 13 ◽

Cited By ~ 1

Author(s):

Pamela A. Smith ◽

Mark J. Kohlbeck

Keyword(s):

Cash Flow ◽

Fair Value ◽

Hedge Accounting

Accounting for Derivatives and Hedging Activities: Comparison of Cash Flow versus Fair Value Hedge Accounting

Issues in Accounting Education ◽

10.2308/iace.2008.23.1.103 ◽

2008 ◽

Vol 23 (1) ◽

pp. 103-117

Author(s):

Pamela A. Smith ◽

Mark J. Kohlbeck

Keyword(s):

Board Of Directors ◽

Cash Flow ◽

Fair Value ◽

Hedge Accounting ◽

Limited Experience

Warfield Company is considering hedging the risk associated with (1) an available-for-sale (AFS) security portfolio and (2) an anticipated purchase of oil. Warfield's Board of Directors has limited experience in this area and has requested that you summarize the accounting and reporting implications if these items are hedged. The hedged risk in these two transactions can be either the risk associated with the cash flow or the risk associated with changes in the fair value. The two risks are discussed in separate parts of the case.

Financial Statement Outcomes When Alternative Derivative Hedging Designations Exist

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v19i3.2167 ◽

2011 ◽

Vol 19 (3) ◽

Author(s):

Arlette C. Wilson ◽

Ronald L. Clark ◽

William Pugh

Keyword(s):

Cash Flow ◽

Fair Value ◽

Financial Statement ◽

Font Size ◽

Hedge Accounting

When alternate reporting methods exist, financial statement preparers tend to select methods that provide more favorable results.  Certain hedging transactions may be designated as either a fair value hedge or a cash flow hedge.  Both designations achieve the objective of matching the gain <loss> on the derivative with the loss <gain> on the hedged item in the same reporting period.  However, the cash flow hedge accounting tends to create a greater appearance of equity volatility.

The mixed attribute model in SFAS 133 cash flow hedge accounting: implications for market pricing

Review of Accounting Studies ◽

10.1007/s11142-012-9201-z ◽

2012 ◽

Vol 18 (1) ◽

pp. 66-94 ◽

Cited By ~ 19

Author(s):

Stephen Makar ◽

Li Wang ◽

Pervaiz Alam

Keyword(s):

Cash Flow ◽

Market Pricing ◽

Hedge Accounting ◽

Sfas 133 ◽

Attribute Model

Hedge accounting and investors’ view of FX risk

International Journal of Accounting and Information Management ◽

10.1108/ijaim-10-2017-0121 ◽

2019 ◽

Vol 27 (3) ◽

pp. 407-424

Author(s):

Li Wang ◽

Stephen Makar

Keyword(s):

Risk Management ◽

Cash Flow ◽

Risk Premium ◽

Relevant Information ◽

Content Type ◽

Risk Premiums ◽

Risk Effects ◽

Positive Effects ◽

Hedge Accounting ◽

The Relationship

Purpose This paper aims to examine the foreign exchange (FX) risk effects of cash flow hedge accounting (HA). To the extent the HA qualification criteria and detailed documentation give investors confidence that FX derivatives effectively hedge risk, market-assigned FX risk premiums will be lower for firms using cash flow HA. Design/methodology/approach Probit analyses rely on the HA designation to examine the decision to use cash flow HA. Primary analyses test the hypothesized relationship between the magnitude of FX risk premiums and such HA use. Additional analyses allow for the interaction between cash flow HA use and the extent of FX derivatives use. Findings Hypothesis tests indicate that the magnitude of the FX risk premium is, on average, lower for firms designated as effective cash flow hedgers. In additional tests, the evidence suggests that the market assigns a lower FX risk premium to firms using a higher level of FX derivatives as effective cash flow hedges. Practical implications The findings suggest that cash flow HA provides risk-relevant information to investors. Such positive effects of HA on investors’ understanding of risk management may guide US accounting regulators in their efforts to improve HA. Corporate treasurers also may benefit from these insights into evaluating the use of HA. Originality/value Responding to the call for research on the risk relevance of cash flow HA, this paper merges the HA literature with the FX risk management literature to directly examine the relationship between HA use and FX risk premiums for manufacturing firms. The authors take an innovative approach using FX rates to which each firm is most exposed and provide evidence consistent with the argument that this approach is helpful in understanding both the decision to use cash flow HA and the effect of such HA use on market-assigned FX risk premiums.

Hedge Accounting and Market Value of Quoted Manufacturing Firms in Nigeria: Panel Data Evidence

International Journal of Accounting & Finance Review ◽

10.46281/ijafr.v2i1.20 ◽

2018 ◽

Vol 2 (1) ◽

pp. 21-38

Author(s):

Alasin Captain Briggs

Keyword(s):

Panel Data ◽

Cash Flow ◽

Significant Relationship ◽

Oil And Gas ◽

Market Value ◽

Fair Value ◽

Business Environment ◽

Cross Sectional ◽

Hedge Accounting ◽

Oil And Gas Firms

In a developing economy such as Nigeria, the business environment is characterized with risk that affects the operational efficiency and the performance of quoted firms. There is needed to make policies that will hedge against risk in the operating environment. This study examined the effect of hedge accounting on the market value of quoted oil and gas firms. A sample of 10 oil and gas firms was selected based on data quality and availability to address the requirements of the variables in the regression model. The study modeled market value as linear function of cash flow hedging, investment hedging and fair value hedging. Cross sectional data was sources from financial statement of the selected firms from 2011 to 2016. From the panel data result, (Fixed Effect Model) the study found that cash flow hedging have positive and significant relationship with market value while fair value hedging and investment hedging have positive but not significant relationship with market value of the quoted oil and gas firms. We therefore recommend that hedge accounting policies should be properly integrated to the operational objectives of the firms.

Hedge Accounting versus no Hedge Accounting for Cash Flow Hedges

SSRN Electronic Journal ◽

10.2139/ssrn.526962 ◽

2004 ◽

Author(s):

Barbara Pirchegger

Keyword(s):

Cash Flow ◽

Hedge Accounting

Hedge accounting incentives for cash flow hedges of forecasted transactions

European Accounting Review ◽

10.1080/09638180500510509 ◽

2006 ◽

Vol 15 (1) ◽

pp. 115-135 ◽

Cited By ~ 11

Author(s):

Barbara Pirchegger

Keyword(s):

Cash Flow ◽

Hedge Accounting

Dividend Payout Ratio: Persoalan Free Cashflow, Debt To Equity Ratio, Kepemilikan Institutional, Investment Opportunity, Dan Kesejahteraan Karyawan

Liquidity ◽

10.32546/lq.v6i1.35 ◽

2017 ◽

Vol 6 (1) ◽

pp. 1-11

Author(s):

Nurlis Azhar ◽

Helmi Chaidir

Keyword(s):

Cash Flow ◽

Significant Influence ◽

Stock Exchange ◽

Institutional Ownership ◽

Free Cash Flow ◽

Manufacturing Companies ◽

Flow Ratio ◽

Prediction Ability ◽

Employee Welfare ◽

Equity Ratio

This study was conducted to examine the effect of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (Parliament) partially on manufacturing companies listed on Indonesia Stock Exchange period 2011-2015. In addition, to test the feasibility of regression model, the influence of Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) to Divident Payout Ratio (DPR) simultaneously at manufacturing company listed on Bursa Indonesia Securities period 2011-2015. The population in this study are 146 manufacturing companies that have been and still listed in Indonesia Stock Exchange period 2011-2013. The sampling technique used was purposive sampling and obtained sample of 42 companies. Data analysis technique used is by using multiple linear regression test. The results showed that Free Cash Flow Ratio, no significant effect on Divident Payout Ratio (DPR). Debt Equity Ratio (DER) has a negative and significant influence on Divident Payout Ratio (DPR), Institutional Ownership has a significant positive effect on Divident Payout Ratio (DPR), Employee Welfare and Price Earning Ratio (PER) has a positive and significant influence on the Divident Payout Ratio ). Simultaneously Free Cash Flow Ratio, Debt Equity Ratio (DER), Institutional Ownership, Employee Welfare and Price Earning Ratio (PER) give effect to Divident Payout Ratio. The prediction ability of the five variables to the Divident Payout Ratio (DPR) is 21.3% as indicated by the adjusted R square of 0.271 while the remaining 79.7% is influenced by other factors not included in the research model.