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Accounting practices for financial instruments. How far are Portuguese companies from IAS?


Author Info

  • Patricia Teixeira Lopes

    (Faculdade de Economia da Universidade do Porto)

  • Lucia Lima Rodrigues

    (Escola de Economia e Gestão da Universidade do Minho)


The purpose of this study is to analyse the current accounting practices for financial instruments by Portuguese companies and compare them to the measurement, recognition and disclosure requirements stipulated in IAS 32 and 39. In order to attain our objective, we drew up a list of 120 categories of inquiry and 370 possible responses that we were interested in analysing. We applied content analysis technique to 2001 listed companies’ annual reports. Our results suggest that the accounting practices for financial instruments by companies listed on the Portuguese stock exchange are very far from what IAS 32 and 39 require. This is especially observed in the measurement and recognition criteria applied to the categories of financial instruments for which the adoption of fair value is required (that is, held-for-trading and available-for-sale financial assets). In what derivative instruments are concerned, we found that the fair value measurement criterion is being adopted by a large number of derivative users. However, with respect to hedging transactions, the gap between accounting practices and the relevant accounting Standards is quite wide. A big improvement in reporting practices regarding this type of instruments will be needed. These findings throw light on the challenges of adopting IAS, particularly with respect to fair value measurement, now that 2005 is near.

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Bibliographic Info

Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 150.

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Length: 41 pages
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:por:fepwps:150

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Keywords: Financial instruments accounting; Fair Value; International Accounting; IAS; Portugal;

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  1. Leandro Canibano & Araceli Mora, 2000. "Evaluating the statistical significance of de facto accounting harmonization: a study of European global players," European Accounting Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 9(3), pages 349-369.
  2. Williams, S. Mitchell, 2004. "An international investigation of associations between societal variables and the amount of disclosure on information technology and communication problems: The case of Y2K," The International Journal of Accounting, Elsevier, Elsevier, vol. 39(1), pages 71-92.
  3. Street, Donna L. & Gray, Sidney J. & Bryant, Stephanie M., 1999. "Acceptance and Observance of International Accounting Standards: An Empirical Study of Companies Claiming to Comply with IASs," The International Journal of Accounting, Elsevier, Elsevier, vol. 34(1), pages 11-48.
  4. Sally Aisbitt, 2001. "Measurement of harmony of financial reporting within and between countries: the case of the Nordic countries," European Accounting Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 10(1), pages 51-72.
  5. Margaret Woods & David Marginson, 2004. "Accounting for derivatives: An evaluation of reporting practice by UK banks," European Accounting Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(2), pages 373-390.
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Cited by:
  1. Patricia Teixeira Lopes & Rui Couto Viana, 2008. "The transition to IFRS: disclosures by Portuguese listed companies," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 285, Universidade do Porto, Faculdade de Economia do Porto.


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