Derivatives Usage in Risk Management By Turkish Non-Financial Firms and Banks: A Comparative Study

Yakup, Selvi and Asli, Turel (2010): Derivatives Usage in Risk Management By Turkish Non-Financial Firms and Banks: A Comparative Study. Published in: Annales Universitatis Apulensis Series Oeconomica , Vol. 2, (2010): pp. 663-671.

Abstract

The purpose of this study to compare the previous research about how the nonfinancial companies listed in the Istanbul Stock Exchange (ISE) and deposit banks in Turkey have disclosed information regarding the usage of derivatives, and the accounting treatment of these derivatives. The results of these studies indicate that banks and the non-financial companies listed in the ISE-100 Indices, which represent 86 % of the market capitalization, use derivatives mainly for hedging purposes. However, the evidence that they usually prefer reporting their gains/losses arising from these transactions as “held for trading” instead of applying “hedge accounting”, since they could not meet the compulsory criterions described in the IAS 39.

• Item Type: MPRA Paper
• Language: English
• Keywords: Derivative Instruments, IAS 39, IFRS 7, Hedge Accounting,
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M41 - Accounting; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing

References

1. Alkeback P., Hagelin N., 1999. Derivatives Usage by Non-Financial Firms in Sweden with an International Comparison, Journal of International Financial Management and Accounting, Vol.10, Issue 2

2. Aysan M.A., 2008. National Adoption of International Financial Reporting Standard: The Turkish Case, 12th World Congress of Accounting Historians, July 20-24, Istanbul, Turkey.

3. Bartram Söhnke M., Brown G.W., Fehle F.R., 2006. International Evidence on Financial Derivatives Usage, Working Paper

4. Bartram Söhnke M., Brown G.W., Conrad J., 2009. The Effects of Derivatives on Firm Risk and Value, Working Paper, available online at http://mpra.ub.uni-muenchen.de/9831

5. Berkram H., Bradbury M.E., Magan S., 1997. An International Comparison of Derivatives Use, Financial Management, Vol. 26 Issue 4, Winter

6. Bhamornsiri S., Schroeder R.G., 2004. The Disclosure of Information on Derivatives under SFAS No.133: Evidence from the Dow 30, Managerial Auditing Journal, Vol.19, No.5

7. Bodnar G.M., Hayt G.S., Marston R.C., 1998. 1998 Wharton Survey of Financial Risk Management by US Non-Financial Firms, Financial Management, Vol. 27 Issue 4

8. Capital Markets Board, Communiqué on Accounting Standards, Serial XI, No. 25, 2003.

9. Capital Markets Board, Communiqué” on “Essentials on Financial Reporting to the Capital Markets”, Serial XI, No. 29, 2008.

10. Clark J., 2009. Comparative Analysis of Financial Risk Management Practice and Hedge Accounting Strategies Under IFRS in Europe, European Accounting Association 32nd Annual Congress, Tampere, Finland.

11. De Ceuster M.J.K., Laveren E., Lodewyckx J., 2000. A Survey into the Use of Derivatives by Large Non-Financial Firms Operating in Belgium, European Financial Management, Vol.6 No.3

12. Hausin M., Hemmingsson C., Johansson J., 2008. How to Hedge Disclosures? IFRS 7 and Hedge Accounting, Master thesis within Business Administration, Handelshögskolan Vıd Göteborgs Universitet, Spring

13. Joseph N.L., 2000. The Choice of Hedging Techniques and the Characteristics of UK Industrial Firms, Journal of Multinational Financial Management, Vol.10 Issue 2, 2000.

14. Mallin C., Ow-Yong K., Reynolds M., 2001. Derivatives Usage in UK Non-Financial Listed Companies”, European Journal of Finance, Vol. 7 Issue 1

15. Nan L., 2007. Impact of SFAS 133 on Speculation and Hedging, Working Paper, Carnegie Mellon University David A. Tepper School of Business, September

16. Selvi Y., Türel A., Yilmaz M.K., Kurun E., 2007. Türev Ürün Sözlesmelerinin Reel Sektör Sirketleri Tarafından Kullanımı ve Riskten Korunma Muhasebesi Açısından Değerlendirilmesi: ĐMKB-100 Sirketleri Üzerine Bir Đnceleme, The World of Accounting Science, Vol. 9 Issue 4, December

17. Türel A., 2008. Riskten Korunma Muhasebesi ve Finansal Tablolarda Raporlanması, PhD Dissertation, June Annales Universitatis Apulensis Series Oeconomica, 12(2), 2010

18. Zhang H., 2009. Effect of Derivative Accounting Rules on Corporate Risk-Management Behaviour, Journal of Accounting and Economics, Vol. 47 Issue 3

19. International Financial Reporting Standards: A Practical Guide, Third Edition, Deloitte Touche Tohmatsu, December 2002.

20. http://www.iasplus.com/standard/ias32.htm, July 07, 2006.

21. http://www.kpmg.lu/Download/IFRS%20Briefing/IFRSBriefing%20Sheet%20- %20Issue%2034.september2005.pdf, July 20, 2006.