Research On Accounting Information Disclosure Of Financial Derivatives

With the changes of the financial environment, the derivative financial instruments which active in the global financial markets, have been used to avoid risks, there high leverage and returns created huge wealth to the financial markets, however, the high risks and highly innovation of the derivative financial tools have also brought a huge crisis to the deal. The source of the US sub-prime mortgage crisis in2008is the inappropriate using of the derivative financial instruments, the crisis caused huge losses to the real economy, which also tumbled the confidence of the market and eventually triggered the global economic crisis. The financial crisis has exposed the defects of the international accounting standards; ineffectively disclosure of the relevant information about the derivative financial instruments by the enterprises could not meet the needs of the investors. Commercial bank, the special financial enterprise, serves as the national mediator of the monetary movement, absorbs public deposits, issues loans, its business is a special product, to collects money for the development of the society, and it is the payment and settlement center of the economic activities. In the process of the safety, liquidity and profitability must be balanced. Once the bank operations meet troubles, the results range from the losses of investors and businesses to the collapse of the whole financial system. Therefore, based on absorbing the predecessors’researches on the accounting information disclosure of the derivative financial instruments, from the viewing of the banking sector which affects the whole national economy and the life of people, my research focus on how to disclosure the accounting information of derivative financial instruments effectively.This thesis uses descriptive statistical method to collects and analyses the data of all the16listed commercial banks of China to show up the situation of the accounting information disclosure of the derivative financial instruments; evaluates the quality of these banks’accounting information disclosure and tries to find out the deficiencies; gives some ideas based on China’s current conditions and calls on the relevant departments to focus on the problems to improve the system of accounting information disclosure of the derivative financial instruments.This thesis is divided into five parts to analyze the financial derivatives accounting information disclosure of Chinese Banks:The first part is the introduction, firstly, it introduces the research background and significance, the emergence of derivative financial instruments has brought new vitality to financial markets, which has created a huge value. However, due to the overuse of the instruments brought risks to the market, after the risk accumulation and diffusion, the financial crisis broke out and leaded to the global economic contraction; accounting information disclosure is the key to control risks. When the crisis erupted, the accounting information disclosure did not play a proper role, it disclosed that the current accounting standards couldn’t adapt to the particularity of the derivative financial instruments. The thesis investigates and analyses the situation of the derivative financial instruments accounting disclosure in these banks which have positive and important roles to safeguard the financial system security and social stability. The thesis, from two aspects of home and abroad, introduces the accounting standard setting of the derivative financial instruments accounting information disclosure with the experts and scholars:The institutions who responsible for setting financial instruments accounting standards and normative documents of the subject are mainly refers to the Basel association, the international accounting standards board, the American accounting standards board and ministry of finance in our country; Scholars from home and abroad research the derivative financial tools mainly from the fair value measurement to replace the historical cost measurement, the necessity of bank accounting information disclosure, the risk of derivative financial instruments, accounting statements of defects, in relation to disclosure format and content, etc. At last, it introduces the basic framework of this thesis and the main contents and methods of the research.The second part first discusses the definition of information disclosure and accounting information disclosure, makes it clear that the content of the accounting information disclosure should be included; reviews the definition and characteristics of the derivative financial instruments,; emphasizes the necessity of the accounting information disclosure from aspect of the banks and characteristics of derivatives; at last analyses the relevant provisions of the derivative financial instruments accounting disclosure, then we can find that there have comparatively perfect rules for the derivative financial instruments disclosed in the table, discloses the derivative financial instruments in the balance sheet as assets and liabilities, discloses the changes of fair value gains and losses in the income statement, but the off-balance-sheet disclosure of derivative financial tools is relatively insufficient, especially in the content and format usually full of constructive suggestions, not mandatory rules. Disclosure is optional, the operation of which is not ideal.The third part, first of all, introduces the uncertain accounting theory, the performance of the contract theory, the comprehensive income theory and the theory of value at risk, the basic theory of derivative financial instruments accounting information disclosure, and then discusses the principles and requirements related to derivative financial instruments accounting disclosure of information.Section four is the core part of this thesis which analyses the situation of the derivative financial instrument accounting information disclosure of our country’s16listed commercial Banks from2008to2011, then carries on the comprehensive comparison and analysis, then discloses the accounting information disclosure of the commercial banks in China is insufficient, especially for the credit risk and market risk disclosure, the related accounting treatment method is not open enough, considers that the cause of this situation are the defects of the report, fair value measurement is difficult to use and the relevant laws and regulations are not sound, which makes the information users unable to get enough information to determine the enterprise’s operating condition, then influence their investment decisions and regulatory agencies could not effectively regulate the market and the safety of the financial markets.The fifth part which based on the analysis of the contents above combined with China’s specific national conditions, sums up the experience at home and abroad, then make suggestions to consummate the derivative financial instruments accounting information disclosure of several countermeasures according to the problems and causes analyzed above. From disclosure principles and requirements, contents and form innovation and regulatory system, makes the relevant suggestions for improvement, hopes it will be helpful to improve the situation of the derivative financial instruments disclosure.In this thesis, the research values mainly include:(1) Systematically elaborated the derivative financial instruments accounting information disclosure of the relevant standards from home and abroad, and then indicates the existing shortcomings in the course of principles.(2)Uses comparative analysis to analyses the situation of derivative financial instruments accounting information disclosure of all16listed commercial banks in our country; uses quantitative statistics according to the classification of off-balance sheet and other information given in the table to disclose the situation disclosure. Although there are articles of Banks according to this train of thought of research, however, it is long time ago and the sample selection is relatively narrow, usually only have4or5,which means narrow coverage surface and representative is not strong.(3) this thesis based on the view of the bank after the new accounting standards promulgated and tries to find out the quality of the derivative financial instruments accounting information disclosure in our nation successfully finds out the disclosure deficiencies; puts forward rectification opinions based on China’s national conditions; improves the derivative financial instrument accounting information disclosure system.(4) comparative analysis which combining with the rules of foreign and domestic financial environment, draws up more detailed regulations for accounting disclosure, explores deeper research about the derivative financial instruments accounting disclosure of our nation.The thesis aims to analyses the implementation and applies of new accounting standard for derivative financial instruments accounting disclosure of information in the commercial Banks to; explores related issues, from the combination of regulatory and accounting standards, then solves related problems. After reviewing large amounts of data and reading lots of literatures, this thesis applies multidisciplinary fusion, however, as my own knowledge is limited, if there has something insufficient,please correct me.