Financial Instruments disclosure Dissertation Example | Topics and Well Written Essays - 12000 words

Financial Instruments revealing - dissertation ExampleTransparency allows the users to view the implication and results of judgments, estimates and decisions undertaken by the management of an organization. Full disclosure of financial instruments refers to the painting of all the necessary data followed while taking decisions, which would provide the investors with reasonable assurance and belief on the activities performed by the organization. Financial Statements and instruments published and issued by an organization must be comparable both with the persistence standards and cross-sectional among firms over a given period of time (Pownall and Schipper, 1999, pp. 259-280). Eccher and Healy (2000), Gelb and Zarowin (2002) and Lang, Ready and Yetman (2003) investigated the race amidst method of accounting system quality and share prices. Lang, Ready and Yetman (2003) stated from the research evidence that cross-listed firms as compared to non-cross-listed firms have higher a ccounting quality as the accounting data of cross-listed firms are more highly associated with price (Lang, Ready and Yetman, 2003, p.375). The relationship between share price and accounting quality is also found in different grocery store segments around different culture, since share prices are affected by the financial disclosure of an organization. Gelb and Zarowin (2002) examined the relationship between the level of corporate disclosure of financial instruments and stock prices. This study found that organizations with more financial instruments disclosure attain higher Earnings Response Coefficient ERCs (i.e. greater price information) in future as compared to organizations with less(prenominal) disclosure (Gelb and Zarowin, 2002, p.33). A controversial issue related to financial instruments is its valuation at uninfected honour. Although fair rank accounting is considered to be the most relevant information for predicting future cash flows, yet the dependability of the fair value measures has been questioned (Hitz, 2007, pp.323-362). Barth (1994) investigated and found how disclosed fair value estimates of investment securities of bank, and gains and losses of securities are reflected in share price on being compared with their historical cost (Hassan and Mohd-Saleh, 2010, pp. 246-247). 1.1 Disclosure of Non-Proprietary Information Proprietary information is a type of information whose disclosure affects a companys future earnings potentially and is beneficial to the shareholders occasionally (Dye, 1985, p.123). Managers are generally reluctant to disclose non-proprietary information about financial instruments since they impression that such disclosure may affect the annual earning and the share prices of the company (Dye, 1985, p.124). As market value of a companys shares is affected with disclosure, so the shareholders may try to implement incentive contracts which countenance managers to suppress unfavourable information and release that in formation which could lead to rise in the market value of the shares. In this contract, when the investors are