The Research Of Information Disclosure Of Derivative Financial Instruments By Public Companies

With the improving and increasingly deep opening of the mutiple level capital market ofour country, more and more public companies use derivatives financial instruments. A varietyof derivative financial instruments which can be used to avoid risk or hedging and so on bringnew challenges to traditional information disclosure. Especially after the subprime mortgagecrisis, it is obvious that derivative financial instruments can be destructive. So the public andscholars pay more attention to them. Although public companies of China which use derivativefinancial instruments is later than western countries, now many public companies use derivativefinancial instruments, especially financial industry companies.China’s Ministry of Finance issued “Accounting standards for enterprises No.37——thepresentation of financial instruments” which make rules on financial instruments inFebruary,2006. Because of the complexity of derivative financial instruments and practicalproblems, public companies face many information disclosure problems. It is necessary to studyinformation disclosure of derivative financial instruments of public companies.The paper pays attention to the information disclosure of derivative financial instruments.This paper is based on standardized research and some cases. The first part introduces thebackground, implications and definitions. The second part does review of domestic and abroadliterature of information disclosure of derivatives financial instruments. The third partintroduces the theories of new institutional economics which are related to the informationdisclosure of derivative financial instruments. The fourth part picks up samples of financialindustry companies and other industry companies according to the websites of China securitiesregulatory commission, studies the status of the information disclosure of derivative financialinstruments and analyses the issues of the information disclosure of derivative financialinstruments, then analyses the reasons of the listed problems from internal and external to theenterprise. The fifth part offer suggestions from the aspects of the simplified specificationinformation disclosure of derivative financial instruments, disclosure of information fully andtimely, improvement the quality of Accounting Standards, supervision and personnel trainingwhich provides reference for the information disclosure of derivative financial instruments.