Title: Company-specific characteristics and the choice of hedge accounting for derivatives reporting: Malaysian case

Authors: Azrul Abdullah; Ku Nor Izah Ku Ismail

Addresses: Faculty of Accountancy, Universiti Teknologi MARA, Perlis Branch, Arau Campus, 02600 Arau, Perlis, Malaysia ' Tunku Puteri Intan Safinaz School of Accountancy, UUM College of Business, Universiti Utara Malaysia, 06010, Sintok, Kedah, Malaysia

Abstract: This study investigates the choice of applying hedge accounting among Malaysian listed companies in reporting their use of derivatives for hedging activities. Based on a sample of 300 Malaysian listed companies, we found that only 162 companies (54%) use derivatives to hedge their financial risk exposure and only 30% of those companies choose to apply hedge accounting. In addition, this study examines the relationship between company-specific characteristics and the choice to apply hedge accounting. The logistic regression results show that the decision to apply hedge accounting by Malaysian companies is positively influenced by company size and leverage. The implications of the findings are discussed and some conclusions are drawn.

Keywords: derivatives; financial instruments; hedge accounting; HACC; disclosure; company-specific characteristics; determinants; Malaysia.

DOI: 10.1504/IJAAPE.2017.085183

International Journal of Accounting, Auditing and Performance Evaluation, 2017 Vol.13 No.3, pp.280 - 292

Available online: 09 Jun 2017 *

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