Hedge accounting and its influence on financial hedging: when the tail wags the dog

Martin Glaum and André Klöcker

Accounting and Business Research, 2011, vol. 41, issue 5, 459-489

Abstract: We analyse the application of hedge accounting and its influence on hedging behaviour in German and Swiss non-financial corporations. Of our sample companies, 72% apply hedge accounting. The likelihood of its use is associated with frequency of derivatives usage, size, IFRS experience, perceived importance of reduced earnings volatility and low growth opportunities. More than half of the companies using hedge accounting indicate that the accounting rules influence their hedging behaviour. Companies are more likely to be affected if they use derivatives only occasionally, are smaller, are highly leveraged, have dispersed shareholding, have fewer growth opportunities and hedge selectively.

Date: 2011
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Citations: View citations in EconPapers (6)

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DOI: 10.1080/00014788.2011.573746

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