Research On The Information Disclosure Of Derivative Financial Instruments Of Chinese Commercial Banks

The subprime mortgage crisis broken out in America in2007evolved to be a global financial crisis in2008. Many financial institutes suffered from tremendous losses because of their participation in CDS transaction, a kind of credit derivative instrument named Credit Default Swap. The disclosure of derivatives again became the focus of the world. Take the lesson from America into consideration, the author thinks that it’s relevant to improve the disclosure of derivatives to manage the risks. The core function of the derivative financial instrument is to avoid risks and lock in profits. However, in the hedge means to improve the financial markets but also to participate in the main efficiency with never anticipated the negative impact of derivative financial instruments on the substance of the contract "zero-sum game", the highly leveraged transactions have multiplied amplification of risk, hug systemic risks quickly accumulated and spread in the market. A series of serious incidents for the application of derivative financial instruments sounded the alarm.Accounting is the basis of risk management of derivative financial instruments. For the present, the theoretical issues on the accounting disclosure of derivatives are still in debate and accounting disclosure system of derivative financial instruments is not in good shape. Then the author elected the accounting disclosure of risks of derivative financial instruments as the research domain. From an accounting point of view this paper explores how to identify the risks of derivative financial instruments timely and accurately and disclose it to external stake holders and how to reduce the adverse impact through internal control and external supervisionThe characteristics of high leverage and balance sheet makes the price volatility of derivative financial instruments, there is a high risk. The painful lessons of great reference value to our country, prove once again that a healthy development, the importance of supervision in the safe in the derivatives market, the improvement of information disclosure style is an important element. Timely, adequate and transparent information disclosure is conducive to the constraint to maintain a reasonable risk positions, strengthen the construction of internal control and ensure the sound operation. Commercial banks are active in derivative markets. So the author chooses them as research samples. After analyzing their consistence to the relevant standards, the author point out the Problems and make some recommendations. This thesis puts forward that enhancing the transparency of information should be the goal of derivative disclosure.In this paper the normative method is the main method and at the same time case study is used. The specification that the role of theory is to guide practice, theory comes from practice, but higher than the practice. It is usually the first target, and then drawn in accordance with established reasoning of accounting theory to guide practice. This paper uses a normative study of the prevention, access to the extensive literature translation, by the method of statistical and comparative analysis of China’s listed banks in derivative financial instruments presentation and disclosure of status and existing problems, and suggestions for improvement. First, the author compares the international organizations, pointed out that the relevant standards and norms in less than derivative financial instruments, information disclosure standards or norms. Second, analysis of China’s11listed banks in2007and2008(the disclosure of part of) the annual report and assessment of China’s listed banks follow the right guidelines on the disclosure of accounting policies, fair value, risk management and hedging activities, the results show that China’s listed banks in compliance with the criteria higher. Again, I will be the practice of information disclosure of listed banks in China and the United States part of the listed banks in derivative financial instruments were compared, pointing out the differences between, sum up the useful experience of the United States in the disclosure of derivative financial instruments worthy of our country to learn from and should be seriously lessons learned. Finally, the author pointed out that the information disclosure of listed banks’ derivative, there is poor communication of standards and norms-setting bodies, standards and specifications operability guidelines on disclosure requirements is not deep enough and format requirements are not uniform liability perfect two angles from the standard-setting quality and the quality of implementation of the guidelines and recommendations for improvement, the Ministry of Finance and Banking Regulatory Commission and the Commission to establish a joint information disclosure group in the guidelines to increase disclosure of the fair value of derivative financial instruments and risk management improve the relevant legal system. The paper also describes the historical development of derivative financial instruments. The accounting standards and disclosure method home and abroad are compared.