Accounting for Risk in Financial Instruments: A Review of Accounting Standards
Abstract
Accountants have long sought methods by which the concept of risk can be communicated through financial statements. Traditionally, certain financial ratios such as the current ratio and leverage ratios have been used for this purpose. Other information cues such as the variability of accounting earnings and asset size have also been employed as proxies for an entity's riskiness. Research suggests that these accounting numbers have an implicit, if not explicit, impact upon the risk expectations of financial analysts and securities markets (see, for example, Beaver, Kettler and Scholes [1970]; Eskew [1979]; Elgers [1980]; Farrelly, Ferris and Reichenstein [1985]).
Citation
Howieson, B. and Hancock, P. (1995), "Accounting for Risk in Financial Instruments: A Review of Accounting Standards", Managerial Finance, Vol. 21 No. 1, pp. 26-42. https://doi.org/10.1108/eb018495
Publisher
:MCB UP Ltd
Copyright © 1995, MCB UP Limited