Are investors lost in translation? The value relevance of foreign currency translation adjustments

Chui, Karen Ka Wan (2013). Are investors lost in translation? The value relevance of foreign currency translation adjustments Honours Thesis, UQ Business School, The University of Queensland.

       
Attached Files (Some files may be inaccessible until you login with your UQ eSpace credentials)
Name Description MIMEType Size Downloads
Karen_Chui_42359061_BCom_Hons.pdf Thesis full text application/pdf 930.44KB 12
Author Chui, Karen Ka Wan
Thesis Title Are investors lost in translation? The value relevance of foreign currency translation adjustments
School, Centre or Institute UQ Business School
Institution The University of Queensland
Publication date 2013-10-24
Thesis type Honours Thesis
Supervisor Jacqueline Birt
Total pages 95
Language eng
Subjects 1501 Accounting, Auditing and Accountability
Abstract/Summary This paper examines the value relevance of foreign currency translation adjustments (FCTAs) in general, and when conditioned on the degree foreign exposure and whether the value relevance of FCTAs changed pre- and post-Comprehensive Income (CI) reporting in Australia. This study examines a premature aspect of FCTA literature by examining how a firm’s degree of foreign exposure (measured by foreign sales revenue; foreign income (sales revenue plus other income); foreign total assets; foreign non-current and number of foreign segments) may affect the value relevance of FCTAs. Most recently, on the 18 July 2013 the International Accounting Standards Board (IASB) issued a Discussion Paper on the topic of reviewing the Conceptual Framework. Despite the fact that the Conceptual Framework does not cover CI, the IASB has raised a specific interest in whether the presentation of information matters, which is precisely one of the issues examined within this study – whether the value relevance of FCTAs are different when presented in the Statement of Changes in Equity and/or notes, of in the Statement of Comprehensive Income. This is the first study conducted from the Australian perspective. The results reveal that there is inconsistent evidence as to whether FCTAs are value relevant for the sample and time period examined. FCTAs are negatively however insignificantly associated with share price in the pooled regression (2006 to 2012). The results support the hypothesis that FCTAs are value relevant when presented on the SCI, due to the more salient display of the FCTA figure. There is limited evidence supporting the hypothesis that FCTAs are more value relevance for firms when higher foreign exposure as measured by the various proxies.

 
Citation counts: Google Scholar Search Google Scholar
Created: Mon, 03 Feb 2014, 14:01:27 EST by Karen Morgan on behalf of UQ Business School