The Effectiveness of Risk Management Committee and Hedge Accounting Practices in Malaysia

Abdullah, Azrul and Ku Ismail, Ku Nor Izah (2016): The Effectiveness of Risk Management Committee and Hedge Accounting Practices in Malaysia. Published in: Information Journal , Vol. 7B, No. 19 (2016): pp. 2971-2976.

Abstract

This study examines the effectiveness of Risk Management Committee (RMC) in influencing hedge accounting practices among non-financial companies listed on the Bursa Malaysia. Our regression results reveal that that there is no significant relationship between the application of hedge accounting and the effectiveness of RMCs. However, there are positive and significant relationships between the choice of hedge accounting and each of company size and leverage. The implications of the findings were discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Hedge Accounting, Hedging Activities, Risk Management Committee, Corporate Governance, Financial Reporting
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M40 - General; 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 > M48 - Government Policy and Regulation; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M49 - Other

References

Glaum, M., and Klocker, A., Hedge accounting and its influence on financial hedging: when the tail wags the dog, Accounting and Business Research, 41 (2000), 459-489.

Papa V. T., and Peters, S. J., User Perspectives on Financial Instrument Risk Disclosures under Derivatives and Hedging Activities Disclosures, CFA Institute 2013.

Hassan, M. S., Saleh, N. M., Yatim, P., and Rahman M. R. C. A., Risk Management Committee and Financial Instrument Disclosure, Asian Journal of Accounting and Governance, 3(2012), 13-28.

Pollock, A. J., FAS 133: what is accounting truth? Journal of applied corporate finance, 17(2005), 102–106. [5] Osterland, A., Good morning, volatility. CFO, 16 (2000), 129–133

DeZoort, T., Hermanson, D., Archambeault, D., and Reed, S., Audit committee effectiveness: a synthesis of the empirical audit committee literature. Journal of Accounting Literature, 21(2002), 38-75.

Ameer, R., Determinants of Corporate Hedging Practices in Malaysia. International Business Research, 3 (2010), 120-130.

Abdullah, M and Chen, L., The Association Between Committees Responsible for Risk Management and the Disclosure Level of Financial Instruments Information Among Listed Companies in Malaysia," Master Thesis, School of Business, Economics and Law, University of Gothenburg, 2010.

Ika, S. R., and Ghazali, N.A.M., Audit committee effectiveness and timeliness of reporting: Indonesian evidence, Managerial Auditing Journal, 27 (2012) 403-424.

Birt, J., Rankin, M., and Song, C. L., Derivatives use and financial instrument disclosure in the extractives industry, Accounting & Finance, 53(2013), 55-83.

Iatridis, G., Accounting disclosure and firms' financial attributes: Evidence from the UK stock market. International Review of Financial Analysis, 17(2008), 219-241.

Ismail R., and Rahman, R. A., Institutional Investors and Board of Directors’ Monitoring Role on Risk Management Disclosure Level in Malaysia, The IUP Journal of Corporate Governance, X (2011), 37-60.

Adznan, S., and Nelson, S. P., Financial Instruments Disclosure Practices: Evidence from Malaysia Listed Firms. Proceeding of International Conference on Accounting Studies, Putra World Trade Centre, Kuala Lumpur, Malaysia. 164 (2014), 62-67.

Ng, H. T., Chong, L.L., and Ismail, H. (2013). Is the risk management committee only a procedural compliance? The Journal of Risk Finance, 14(1), 71-86.