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Translation gains and losses and firms' accounting choices: UK evidence on and before SSAP No. 20


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  • George Emmanuel Iatridis
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    In the light of foreign exchange (FX) rate fluctuation, this paper concentrates in the accounting choices of firms and their motivation to adopt or defer the adoption of the UK Statement of Standard Accounting Practice (SSAP) No. 20 "Foreign Currency Translation". The paper provides evidence that the implementation of SSAP No. 20 has improved the financial accounting measures of firms, such as profitability and leverage. The effects of the standard tended to be more substantial for adopters that exhibited larger size and higher leverage measures. In the absence of a clear regulatory framework, prior to SSAP No. 20, the financial reporting of translation gains and losses displayed significant variation and inconsistencies. Overall, firms anticipated the issue of SSAP No. 20 and tended to recognise the translation differences in the balance sheet.

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    Bibliographic Info

    Article provided by Inderscience Enterprises Ltd in its journal Int. J. of Accounting, Auditing and Performance Evaluation.

    Volume (Year): 1 (2004)
    Issue (Month): 3 ()
    Pages: 304-341

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    Handle: RePEc:ids:ijaape:v:1:y:2004:i:3:p:304-341

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    Keywords: translation gains; translation losses; financial reporting; SSAP No. 20; SFAS No. 52; accounting policy choice; adoption motives; earnings volatility; foreign exchange; exchange rate fluctuation; foreign currency translation; financial accounting measures; profitability; leverage.;


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