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Corporate risk management and hedge accounting

Research output: Contribution to journalJournal article

Published

Journal publication date03/2013
JournalContemporary Accounting Research
Journal number1
Volume30
Number of pages24
Pages116-139
Early online date8/03/12
Original languageEnglish

Abstract

Motivated by the debate about the economic consequences of mandatory adoption of International Financial Reporting Standards (IFRS), this study investigates the effect of hedge accounting under IFRS on corporate risk management. Using a sample of large UK non-financial firms from 2003 to 2008, we show that the implementation of the new standards reduces the level of asymmetric information faced by derivative users. Specifically, for firms that hedge under IFRS we find that analysts’ forecast error and dispersion are significantly lower. The paper contributes to prior research on the effects of hedge accounting and on the adoption of IFRS.

Bibliographic note

This is a pre-print of an article published in Contemporary Accounting Research, 30 (1), 2013. (c) Wiley.