Accounting for financial instruments: A comparison of European companies’ practices with IAS 32 and IAS 39

Patricia Lopes () and Lúcia Lima Rodrigues ()
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Lúcia Lima Rodrigues: School of Management and Economics, University of Minho, Portugal

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This paper analyses accounting for financial instruments of STOXX 50 companies and compare them to the requirements of IAS 32 and IAS 39, before IFRS are mandatory in the European Union. We use a list of 120 categories of inquiry and 370 possible responses and analyse companies’ annual reports. The results show that the majority of companies disclose the fair value amounts and methods of calculation but the information is neither clear nor objective, preventing the fair value information from being relevant and useful. We conclude that companies have a long way to go in terms of accounting and disclosure of financial instruments, namely derivatives. The mandatory adoption of more stringent standards such as the IAS 32 and IAS 39 may improve the information disclosed by companies. Doubts about the compliance degree and the usefulness of the information still remain. This paper brings new perspectives to the challenges of IAS/IFRS adoption, namely to what relates to fair value measurement.

Keywords: Accounting for financial instruments; Fair value accounting; International Accounting; Accounting harmonisation; IAS/IFRS; STOXX 50 (search for similar items in EconPapers)
JEL-codes: M41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007-03
New Economics Papers: this item is included in nep-acc and nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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