Complexity in accounting for derivatives: Professional experience, education and gender differences

Abstract

Purpose

The purpose of this study is to analyze the perception of accountants in relation to the complexity of accounting for financial instruments and in relation to the disclosure of financial instruments in annual reports. Both aspects are relevant for the external users, and for the firms’ internal management.

Design/methodology/approach

The database comprises questionnaires answered by accountants from Brazil and Chile. Data were analyzed based on reliability statistics and multivariate regression analysis.

Findings

The main results indicate that accountants perceive the accounting for derivatives, hedge accounting, fair value measurement of financial instruments and the respective disclosure of these operations as a complex issue. These findings are interesting considering that there are detailed accounting standards relating to financial instruments.

Research limitations/implications

The results indicate that education and gender affect the perception of complexity about accounting of derivatives.

Practical implications

Findings from this research show that accountants do perceive derivatives as complex items for accounting, particularly accounting for hedges.

Social implications

The results can motivate some initiatives for training activities and for teaching academic content about financial instruments in undergraduate courses.

Originality/value

To the best of the authors’ knowledge, this is the first study that tests some personal characteristics of accountants (namely, professional experience, education and gender), in contrast to their perceptions about complexity of accounting for derivatives.

Citation

Malaquias, R.F. and Zambra, P. (2018), "Complexity in accounting for derivatives: Professional experience, education and gender differences", Accounting Research Journal, Vol. 33 No. 1, pp. 108-127. https://doi.org/10.1108/ARJ-11-2017-0192