Hedge accounting and its influence on financial hedging: when the tail wags the dog |
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Authors: | Martin Glaum André Klöcker |
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Institution: | 1. Justus-Liebig-University Giessen, Department of International Accounting , Licher Strasse 62, 35394, Giessen, Germany martin.glaum@wirtschaft.uni-giessen.de;3. Justus-Liebig-University Giessen, Department of International Accounting , Licher Strasse 62, 35394, Giessen, Germany |
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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. |
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Keywords: | hedge accounting hedging IAS 39 derivatives risk management SFAS 133 |
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