Derivatives use and financial instrument disclosure in the extractives industry

Birt, Jacqueline, Rankin, Michaela and Song, Chen L. (2013) Derivatives use and financial instrument disclosure in the extractives industry. Accounting and Finance, 53 1: 55-83. doi:10.1111/acfi.12001

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Author Birt, Jacqueline
Rankin, Michaela
Song, Chen L.
Title Derivatives use and financial instrument disclosure in the extractives industry
Journal name Accounting and Finance   Check publisher's open access policy
ISSN 0810-5391
1467-629X
Publication date 2013-03
Sub-type Article (original research)
DOI 10.1111/acfi.12001
Open Access Status
Volume 53
Issue 1
Start page 55
End page 83
Total pages 29
Place of publication Richmond, VIC, Australia
Publisher Wiley-Blackwell
Collection year 2014
Language eng
Abstract This article documents the use and disclosure of derivatives in the Australian extractives industry. We find that derivatives are used by 23 per cent of our sample, with mitigation of commodity risk and foreign exchange risk being the most common purposes for which derivatives are used. The most common types of derivatives used in the sector for hedging purposes are forward rate agreements and options. Results indicate that derivative use is positively associated with financial risk and firm size. We also examine the relation between firm characteristics and the extent of financial instrument disclosure, using a disclosure index based on the additional requirements in IFRS 7 Financial Instruments: Disclosures. Empirical results reveal that large firms with higher leverage, which use derivatives, and are audited by a Big 4 auditor provide more extensive disclosure of financial instruments.
Keyword Derivatives
Financial instruments
Hedging
Extractive industry
IFRS 7
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Non HERDC
UQ Business School Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 7 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 7 times in Scopus Article | Citations
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Created: Tue, 18 Jun 2013, 16:26:16 EST by Susan Peeters on behalf of UQ Business School