The impact of hedging with derivative instruments on reported earnings volatility
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.
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.
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.
Volume (Year): 23 (2013)
Issue (Month): 2 (January)
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAFE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAFE20|
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 references are entirely missing, you can add them using this form.