The usefulness of derivative-related disclosure: evidence from major Australian banks.

Li, Steven; Gao, Simon S

Abstract

In recent years, there has been an increasing public demand for firms, especially financial institutions, to disclose more information related to derivatives due to a series of high profile financial scandals. A number of countries have established accounting and reporting standards for derivative instruments. Limited research on the usefulness and quality of derivative related disclosures are mostly based on the US. This paper examines the usefulness of derivative related disclosure in the Australian banking sector. We first review the policy and requirements for derivative related disclosures in the Australian banking sector. Then we investigate the usefulness of derivative related disclosures based on a sample from major Australian banks. Our preliminary empirical results reveal that the disclosure of principal amounts and credit disclosure appear to be insignificant to stock returns. However, the disclosures of fair gains and losses for both trading and non-trading derivatives are significant to the stock returns.

Citation

Li, S., & Gao, S. S. (2007). The usefulness of derivative-related disclosure: evidence from major Australian banks. International journal of accounting, auditing and performance evaluation, 4, 248-262. https://doi.org/10.1504/IJAAPE.2007.016280

• Journal Article Type: Article
• Publication Date: 2007
• Deposit Date: Jan 25, 2012
• Print ISSN: 1740-8008
• Publisher: Inderscience
• Peer Reviewed: Peer Reviewed
• Volume: 4
• Pages: 248-262
• DOI: https://doi.org/10.1504/IJAAPE.2007.016280
• Keywords: derivatives; disclosure; Australian banks; Australia; principal amounts; credit disclosure; stock returns; fair gains; losses.
• Public URL: http://researchrepository.napier.ac.uk/id/eprint/4919
• Publisher URL: http://dx.doi.org/10.1504/IJAAPE.2007.016280