Advanced Search
MyIDEAS: Login to save this article or follow this journal

The impact of hedging with derivative instruments on reported earnings volatility

Contents:

Author Info

  • N. Beneda
Registered author(s):

    Abstract

    This study uses a regression model and seeks to find an association between lower earnings volatility (dependent variable) and the use of hedging with derivatives (independent variable). Prior to the Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, issued in 1998 and implemented in 2002, there was no way to examine the impact of hedging, with derivative instruments, on reported earnings volatility without observing footnote disclosures. The results of the study indicate a strong association between the low reported earnings volatility and the firm use of derivative instruments for hedging. This study also indicates that the effectiveness in smoothing reported earnings by using cash flow hedging and the associated hedge accounting increases over the 8-year study period, after the implementation of SFAS No. 133, perhaps suggesting a learning curve for firm use.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://hdl.handle.net/10.1080/09603107.2012.709599
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

    Volume (Year): 23 (2013)
    Issue (Month): 2 (January)
    Pages: 165-179

    as in new window
    Handle: RePEc:taf:apfiec:v:23:y:2013:i:2:p:165-179

    Contact details of provider:
    Web page: http://www.tandfonline.com/RAFE20

    Order Information:
    Web: http://www.tandfonline.com/pricing/journal/RAFE20

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:taf:apfiec:v:23:y:2013:i:2:p:165-179. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.