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


  • 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.

Suggested Citation

  • Patricia Teixeira Lopes & Lucia Lima Rodrigues, 2004. "Accounting practices for financial instruments. How far are Portuguese companies from IAS?," FEP Working Papers 150, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:150

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    References listed on IDEAS

    1. 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, vol. 10(1), pages 51-72.
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    5. Keryn G. Chalmers & Jayne M. Godfrey, 2000. "Practice versus Prescription in the Disclosure and Recognition of Derivatives," Australian Accounting Review, CPA Australia, vol. 10(21), pages 40-50, July.
    6. Margaret Woods & David Marginson, 2004. "Accounting for derivatives: An evaluation of reporting practice by UK banks," European Accounting Review, Taylor & Francis Journals, vol. 13(2), pages 373-390.
    7. 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, vol. 9(3), pages 349-369.
    8. 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, vol. 34(1), pages 11-48.
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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 285, Universidade do Porto, Faculdade de Economia do Porto.

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

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