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

Francisco Leote; Clarisse Pereira; Rui Brites; Teresa Godinho

doi:doi:10.11648/j.ijafrm.20200501.15

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

Francisco Leote, Clarisse Pereira, Rui Brites, Teresa Godinho

Published in International Journal of Accounting, Finance and Risk Management (Volume 5, Issue 1)

Received: 30 December 2019 Accepted: 6 January 2020 Published: 10 March 2020

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Abstract

The constant changes in the business context and international relations have led companies to be provided with financial reporting with useful information, including their relevance, comparability and harmonization as required by International Financial Reporting Standards (IFRS). This study analyzes the level of disclosure of derivative financial instruments from companies in the PSI20 stock index, in the Euronext Lisbon stock exchange, according to requirements of IRFS 7. A disclosure index was created, based on the reports and accounts of companies in the period 2015-2017. To analyze the evolution of the disclosure level according to companies’ characteristics (dimension, profitability, share price and auditor type), we applied a cluster analysis. The results show a high level of disclosure. This evidence may be related to the mandatory adoption of IAS / IFRS and may also reflect companies' greater concern in disclosing this type of information due to the negative impact that the global financial crisis has had on corporate performance in general. The dimension is the variable that affects disclosure. That is, there is a tendency to, the higher the company the higher the level of disclosure. However, the results show that smaller companies also have high levels of disclosure. This may be associated with greater or lesser quantity or value of derivative financial instruments used.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 5, Issue 1) This article belongs to the Special Issue Perspectives on Risk Management and Impact on Sustainability of Companies
DOI	10.11648/j.ijafrm.20200501.15
Page(s)	52-61
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Financial Instruments, Disclosure, IFRS 7

References

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[4]	Regulation (EC) No 1725/2003 of 29 September 2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council.
[5]	Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council.
[6]	Marshall, A. P., Weetman, P. (2002), Information asymmetry in disclosure of foreign exchange risk management: can regulation be effective? Journal of Economics and Business. Vol. 54, 31-53.
[7]	Darós, L.; Borba, J.; Junior, J. (2007), Verificação do cumprimento das normas sobre evidenciação de instrumentos financeiros derivativos nas demonstrações contábeis das empresas auditadas pelas Big Four; Congresso Universidade de São Paulo Controladoria e Contabilidade; São Paulo, https://congressousp.fipecafi.org/anais/artigos72007/543.pdf, consultado em 12-12-2019.
[8]	Lemos, K.; Rodrigues, L. (2007), Divulgação de informação sobre operações com instrumentos derivados: Evidência empírica no mercado de capitais português; Tékhne-Revista de Estudos Politécnicos IV, 149-188.
[9]	Lemos, K.; Rodrigues, L.; Ariza, L. (2009), Determinantes do nível de divulgação de informação sobre instrumentos derivados: Evidência empírica no mercado de capitais português; Tékhne-Revista de Estudos Politécnicos VII, 145-175.
[10]	Resende, M. (2014). Principais determinantes das divulgações exigidas pela IFRS 7: O caso das empresas cotadas em Portugal; Mestrado- Contabilidade, Fiscalidade e Finanças Empresariais; ISEG; Lisboa, unpublished.
[11]	Chalmers, K., Godfrey, J. (2004), Reputation costs: the impetus for voluntary derivative financial instrument reporting, Accounting, Organizations and Society 29, 95-125.
[12]	Monteiro, S. (2007), Fatores explicativos do grau de divulgação ambiental em grandes empresas a operar em Portugal: Análise univariada; Instituto Politécnico do Cávado e do Ave; Ayala Calvo, J. C. y grupo de investigación FEDRA, Conocimiento, innovación y emprendedores: Camino al futuro.
[13]	Filho, D.; Júnior, J. (2009). Desvendando os Mistérios do Coeficiente de Correlação de Pearson (r); Universidade Federal de Pernambuco (UFPE); Revista Política Hoje 18, 115-146.
[14]	Giraldo-Prieto, C.; Uribe, G; Bermejo, C.; Herrera, D. (2017), Coberturas financieras con derivados y su incidencia en el valor de Mercado en empresas colombianas que cotizan en Bolsa; Contaduría y Administración 62; 1553–1571.
[15]	Moura, G.; Dagostini, L.; Theis, M.; Klann, R. (2017), Fatores determinantes para utilização do Hedge em companhias abertas listadas na BM&FBOVESPA; Contabilidade Vista & Revista 28, 101-120.
[16]	Hassan, M. (2004), The information quality of derivative disclosures in corporate annual reports of Australian firms in the extractive industries; University Kebangsaan Malaysia; M. Social Science (Southampton); School of Accountancy at Queensland University of Technology.
[17]	Nunes, S. (2014). A divulgação sobre instrumentos derivados: Evidência empírica do setor da indústria português; Instituto Politécnico de Lisboa, Instituto Superior de Contabilidade e Administração de Lisboa (ISCAL); Lisboa; unpublished.
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APA Style

Francisco Leote, Clarisse Pereira, Rui Brites, Teresa Godinho. (2020). Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies. International Journal of Accounting, Finance and Risk Management, 5(1), 52-61. https://doi.org/10.11648/j.ijafrm.20200501.15

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ACS Style

Francisco Leote; Clarisse Pereira; Rui Brites; Teresa Godinho. Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies. Int. J. Account. Finance Risk Manag. 2020, 5(1), 52-61. doi: 10.11648/j.ijafrm.20200501.15

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AMA Style

Francisco Leote, Clarisse Pereira, Rui Brites, Teresa Godinho. Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies. Int J Account Finance Risk Manag. 2020;5(1):52-61. doi: 10.11648/j.ijafrm.20200501.15

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@article{10.11648/j.ijafrm.20200501.15,
  author = {Francisco Leote and Clarisse Pereira and Rui Brites and Teresa Godinho},
  title = {Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {5},
  number = {1},
  pages = {52-61},
  doi = {10.11648/j.ijafrm.20200501.15},
  url = {https://doi.org/10.11648/j.ijafrm.20200501.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20200501.15},
  abstract = {The constant changes in the business context and international relations have led companies to be provided with financial reporting with useful information, including their relevance, comparability and harmonization as required by International Financial Reporting Standards (IFRS). This study analyzes the level of disclosure of derivative financial instruments from companies in the PSI20 stock index, in the Euronext Lisbon stock exchange, according to requirements of IRFS 7. A disclosure index was created, based on the reports and accounts of companies in the period 2015-2017. To analyze the evolution of the disclosure level according to companies’ characteristics (dimension, profitability, share price and auditor type), we applied a cluster analysis. The results show a high level of disclosure. This evidence may be related to the mandatory adoption of IAS / IFRS and may also reflect companies' greater concern in disclosing this type of information due to the negative impact that the global financial crisis has had on corporate performance in general. The dimension is the variable that affects disclosure. That is, there is a tendency to, the higher the company the higher the level of disclosure. However, the results show that smaller companies also have high levels of disclosure. This may be associated with greater or lesser quantity or value of derivative financial instruments used.},
 year = {2020}
}

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TY  - JOUR
T1  - Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies
AU  - Francisco Leote
AU  - Clarisse Pereira
AU  - Rui Brites
AU  - Teresa Godinho
Y1  - 2020/03/10
PY  - 2020
N1  - https://doi.org/10.11648/j.ijafrm.20200501.15
DO  - 10.11648/j.ijafrm.20200501.15
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 52
EP  - 61
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20200501.15
AB  - The constant changes in the business context and international relations have led companies to be provided with financial reporting with useful information, including their relevance, comparability and harmonization as required by International Financial Reporting Standards (IFRS). This study analyzes the level of disclosure of derivative financial instruments from companies in the PSI20 stock index, in the Euronext Lisbon stock exchange, according to requirements of IRFS 7. A disclosure index was created, based on the reports and accounts of companies in the period 2015-2017. To analyze the evolution of the disclosure level according to companies’ characteristics (dimension, profitability, share price and auditor type), we applied a cluster analysis. The results show a high level of disclosure. This evidence may be related to the mandatory adoption of IAS / IFRS and may also reflect companies' greater concern in disclosing this type of information due to the negative impact that the global financial crisis has had on corporate performance in general. The dimension is the variable that affects disclosure. That is, there is a tendency to, the higher the company the higher the level of disclosure. However, the results show that smaller companies also have high levels of disclosure. This may be associated with greater or lesser quantity or value of derivative financial instruments used.
VL  - 5
IS  - 1
ER  -

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Author Information

Francisco Leote

Department of Accounting and Finance, Business School of Polytechnic Institute of Setúbal, Setúbal, Portugal
Clarisse Pereira

Department of Accounting and Finance, Business School of Polytechnic Institute of Setúbal, Setúbal, Portugal
Rui Brites

Department of Management, Business School of Polytechnic Institute of Setúbal, Setúbal, Portugal
Teresa Godinho

Department of Accounting and Finance, Business School of Polytechnic Institute of Setúbal, Setúbal, Portugal

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APA Style

Francisco Leote, Clarisse Pereira, Rui Brites, Teresa Godinho. (2020). Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies. International Journal of Accounting, Finance and Risk Management, 5(1), 52-61. https://doi.org/10.11648/j.ijafrm.20200501.15

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ACS Style

Francisco Leote; Clarisse Pereira; Rui Brites; Teresa Godinho. Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies. Int. J. Account. Finance Risk Manag. 2020, 5(1), 52-61. doi: 10.11648/j.ijafrm.20200501.15

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AMA Style

Francisco Leote, Clarisse Pereira, Rui Brites, Teresa Godinho. Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies. Int J Account Finance Risk Manag. 2020;5(1):52-61. doi: 10.11648/j.ijafrm.20200501.15

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@article{10.11648/j.ijafrm.20200501.15,
  author = {Francisco Leote and Clarisse Pereira and Rui Brites and Teresa Godinho},
  title = {Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {5},
  number = {1},
  pages = {52-61},
  doi = {10.11648/j.ijafrm.20200501.15},
  url = {https://doi.org/10.11648/j.ijafrm.20200501.15},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20200501.15},
  abstract = {The constant changes in the business context and international relations have led companies to be provided with financial reporting with useful information, including their relevance, comparability and harmonization as required by International Financial Reporting Standards (IFRS). This study analyzes the level of disclosure of derivative financial instruments from companies in the PSI20 stock index, in the Euronext Lisbon stock exchange, according to requirements of IRFS 7. A disclosure index was created, based on the reports and accounts of companies in the period 2015-2017. To analyze the evolution of the disclosure level according to companies’ characteristics (dimension, profitability, share price and auditor type), we applied a cluster analysis. The results show a high level of disclosure. This evidence may be related to the mandatory adoption of IAS / IFRS and may also reflect companies' greater concern in disclosing this type of information due to the negative impact that the global financial crisis has had on corporate performance in general. The dimension is the variable that affects disclosure. That is, there is a tendency to, the higher the company the higher the level of disclosure. However, the results show that smaller companies also have high levels of disclosure. This may be associated with greater or lesser quantity or value of derivative financial instruments used.},
 year = {2020}
}

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TY  - JOUR
T1  - Financial Instruments’ Disclosure in Compliance with IFRS 7: The Portuguese Companies
AU  - Francisco Leote
AU  - Clarisse Pereira
AU  - Rui Brites
AU  - Teresa Godinho
Y1  - 2020/03/10
PY  - 2020
N1  - https://doi.org/10.11648/j.ijafrm.20200501.15
DO  - 10.11648/j.ijafrm.20200501.15
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 52
EP  - 61
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20200501.15
AB  - The constant changes in the business context and international relations have led companies to be provided with financial reporting with useful information, including their relevance, comparability and harmonization as required by International Financial Reporting Standards (IFRS). This study analyzes the level of disclosure of derivative financial instruments from companies in the PSI20 stock index, in the Euronext Lisbon stock exchange, according to requirements of IRFS 7. A disclosure index was created, based on the reports and accounts of companies in the period 2015-2017. To analyze the evolution of the disclosure level according to companies’ characteristics (dimension, profitability, share price and auditor type), we applied a cluster analysis. The results show a high level of disclosure. This evidence may be related to the mandatory adoption of IAS / IFRS and may also reflect companies' greater concern in disclosing this type of information due to the negative impact that the global financial crisis has had on corporate performance in general. The dimension is the variable that affects disclosure. That is, there is a tendency to, the higher the company the higher the level of disclosure. However, the results show that smaller companies also have high levels of disclosure. This may be associated with greater or lesser quantity or value of derivative financial instruments used.
VL  - 5
IS  - 1
ER  -

Copy | Download