scholarly journals The value relevance of unrealized gains and losses around the financial credit crisis: Evidence from the UK

2016 ◽  
Vol 14 (1) ◽  
pp. 351-359 ◽  
Author(s):  
Mohammad Alhadab ◽  
Yasean Tahat
Keyword(s):  
Foreign Currency ◽  
Value Relevance ◽  
Credit Crisis ◽  
Accounting Standard ◽  
Crisis Period ◽  
Currency Exchange ◽  
Financial Credit ◽  
The Uk ◽  
Gains And Losses ◽  
The Impact

This paper examines the usefulness of the unrealized gains and losses on foreign currency exchange and marketable securities, using a sample of UK non-financial FTSE 350 around the recent financial credit crisis. A number of findings are reported by the current study. First, study finds that the unrealized gains and losses on foreign currency exchange and marketable securities matter when making investment decisions and can explain changes in firms’ market value, however, this relationship becomes more negative post-the crisis period indicating that investors attach some value for such information. Second, the study concludes that investors underestimate the value of firms report unrealized gains and losses in the post-crisis period, confirming the view that these items are considered to be one of the major drivers of the credit crisis. The present articles provides a great deal of implication for national (UK Accounting Standard Board) and international (IASB) accounting regulators about the impact of using unrealized gains and losses of foreign currency exchange and marketable securities.

scholarly journals Value relevance of accounting data and financial crisis in Europe: an empirical analysis

2012 ◽  
Vol 2 (2) ◽  
pp. 201 ◽  
Author(s):  
Alain Devalle
Keyword(s):  
Financial Crisis ◽  
Positive Impact ◽  
Value Relevance ◽  
Net Income ◽  
Accounting Data ◽  
Book Value ◽  
Crisis Period ◽  
Comprehensive Income ◽  
The Impact ◽  
The Relationship

This paper aims at verifying the relationship between book value and  market value for a four years period (2006-2009) in Europe, under IFRS. In particular, I used value relevance approach to measure whether net income or comprehensive income are more useful to understand the relationship between market data and financial data. Moreover, the paper analyzes the impact of financial crisis on the value relevance of accounting data. The examination period runs from a pre-crisis period (2006-2007) to an in-crisis period (2008-2009). Results shows that comprehensive income is more value relevant than net income. Furthermore, the financial crisis has a positive impact on value relevance.  

scholarly journals The Requisite Knowledge for Construction Professionals in the Middle East Regarding Foreign Exchange Currency Fluctuation Risk The Requisite Knowledge for Construction Professionals in the Middle East Regarding Foreign Exchange Currency Fluctuation Risk

2020 ◽  
Author(s):  
Haitham Almsaeed
Keyword(s):  
Middle East ◽  
Construction Industry ◽  
Foreign Exchange ◽  
Global Economy ◽  
Foreign Currency ◽  
Operating Performance ◽  
Oil Prices ◽  
Currency Exchange ◽  
Exchange Rate Movements ◽  
The Impact

Construction is commonly known as a high-risk business; the risks and uncertainties associated with construction activities are usually higher and more dynamic than any other industry. One of the risks imposed on the firms working abroad is related to the impact of currency fluctuation on operating performance. In the Middle East, the data collected on the ground indicate that many construction professionals, including estimators and cost controllers, either lack the necessary related knowledge or they tend to pay insufficient attention to this critical risk in their projects. Because of the unstable global economy, a decreasing pipeline of new opportunities due to the deterioration of oil prices, and the more laborious and lengthy payment terms enforced in contracts across the Middle East, exchange rate movements play an increasing role in the contractors performance. Those who work in this region have begun to realise the challenges associated with managing the foreign currency exchange (FOREX) fluctuation risk. This article provides an overview of the currency fluctuation risk within the context of the construction industry, identifies the associated challenges and attempts to offer a framework for the regional companies that could mitigate the FOREX risk.

The effects of business model regulation on the value relevance of traditional performance measures. Some evidence from UK companies

2019 ◽  
pp. 83-111
Author(s):  
Lorenzo Simoni ◽  
Laura Bini ◽  
Francesco Giunta
Keyword(s):  
Business Model ◽  
Value Relevance ◽  
Moderating Effect ◽  
Net Income ◽  
Financial Measures ◽  
Book Value ◽  
First Case ◽  
Mandatory Requirement ◽  
The Uk ◽  
The Impact

The first case in the world of a mandatory requirement to disclose business model (BM) in the annual report is represented by Companies Act 2013 issued in the UK. The BM offers a simplified representation of a company's key resources and of how these are combined to create value. For this reason, a systematic communication of BM should affect the way a company's book value and its capability to generate earnings are perceived. The purpose of this work is to investigate the impact of mandatory BM disclosure on the value relevance of traditional financial measures. Focusing on a sample of UK listed companies over a six-year period, Ohlson model is utilized to assess the value relevance of book value and net income and their interactions with a dummy variable that accounts for the introduction of mandatory disclosure of BM. In line with previous studies on non-financial disclosure regulations, results show that the introduction of the mandatory requirement to disclose BM has a negative moderating effect on book value of equity and a positive moderating effect on net income. As this is the first study to investigate the effects of a mandatory BM disclosure regime, it could be of interest for both academics and standard-setters.

scholarly journals Presentation Pattern and the Value Relevance of Comprehensive Income --- Evidence from China

2017 ◽  
Vol 9 (6) ◽  
pp. 31 ◽  
Author(s):  
Wenjing Xu ◽  
Ming Qi
Keyword(s):  
Financial Reporting ◽  
Information Disclosure ◽  
Value Relevance ◽  
Accounting Standards ◽  
Accounting Standard ◽  
Financial Reporting Standards ◽  
Comprehensive Income ◽  
Other Comprehensive Income ◽  
The Impact

In 2006 the Chinese Ministry of finance(CMF) issued new accounting standards that required companies began to present comprehensive income information in the statement of equity. In 2009 and 2014, CMF changed the comprehensive income presentation pattern consecutively twice, from the equity statement pattern to the performance statement transition pattern, and then to the single performance statement. The purpose of these changes is to harmonize China Accounting Standard (CAS) with International Financial Reporting Standards(IFRS). It also aims to enhance the usefulness of comprehensive income information by improving the transparency of information disclosure. From the perspective of presentation patterns, the paper examines the influence of presentation pattern changes on the value relevance of comprehensive income (CI), and on other comprehensive income (OCI). The results show that, under the equity statement pattern, neither CI nor OCI was correlated with value. Under the performance statement transition pattern, both CI and OCI have the value relevance. Under the single performance statement pattern, the CI has higher value relevance, while the OCI does not reflect higher value relevance. This study reveals the impact of comprehensive income presentation pattern on the usefulness of decision making. It has certain inspiration and reference for improving the quality of accounting standards and financial reporting.

scholarly journals The Impact of Interest Rate Changes on the Islamic Foreign Exchange Forward in the Malaysian Derivative Market

2020 ◽  
Author(s):  
Nor Azmah Md. Arif ◽  
Ruhaini Muda ◽  
Md. Mahmudul Alam ◽  
Saadiah Mohamad
Keyword(s):  
Interest Rate ◽  
Foreign Exchange ◽  
Risk Taking ◽  
Trading Volume ◽  
Foreign Currency ◽  
Medium Term ◽  
Currency Exchange ◽  
Main Challenge ◽  
Short Run ◽  
The Impact

Islamic foreign exchange forward plays a significant role to mitigate various foreign currency exchange risks. The main challenge that impedes the development and operation of the Islamic foreign exchange forward as a hedging instrument is the behaviour of relying on existing conventional framework with core conception of relying on interest rate and excessive risk taking. This study utilized monthly data from April 2004 to October 2017 of the Malaysian derivatives market. This study found that in the absence of an alternative profit-rate related benchmark and cross border activities, Islamic banks are constrained to use the interest rate benchmark. In the short run, both medium term (6-months) and longer term (12-months) tenures indicate faster speed of adjustment possibility due to higher trading volume and less demand for the medium term for the Islamic foreign exchange forward contract. It implies a need of the Islamic foreign exchange forward as a longer-term hedging instrument and not for a short term speculation and risk-taking purposes, as prohibited by shariah.

Economic Slowdown and Indian Firms: An Overview

2009 ◽  
Vol 34 (3) ◽  
pp. 59-66
Author(s):  
Joshy Jacob ◽  
Prem Chander
Keyword(s):  
Financial Performance ◽  
Foreign Currency ◽  
Domestic Demand ◽  
Adverse Impact ◽  
Capital Investments ◽  
Short Term ◽  
Crisis Period ◽  
Economic Slowdown ◽  
Foreign Currency Debt ◽  
The Impact

Joshy Jacob and Prem Chander examine the nature and extent of the impact of economic slowdown on the financial performance, investments, and valuation of selected Indian firms. Findings indicate decline of the growth of revenues, profits, and investments. However, in some sectors the decline started much ahead of the crisis period, implying that the domestic demand fall is primarily the cause. It appears that the initial adverse impact that firms with more share of international revenues had is substantially offset by rupee depreciation. Capital investments by financially constrained firms appear to have declined more drastically. Leverage did not have much adverse impact on valuation, except for the firms with greater dependence on short-term and foreign currency debt.

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