| Summary: | 碩士 === 輔仁大學 === 會計學系碩士班 === 104 === The financial tsunami happened in 2008 has caused a global economic recession, which consequently made a global stock plunge seriously. This financial tsunami spread rapidly through over the world and sped up the financial deficit and governmental debt in European countries. In 2009, Greece was downgraded by three major credit rating agencies, as a result, the disaster – the European sovereign debt crisis commenced. One of reasons behind the crisis is related to use of derivatives. Therefore, people had a question: “Can the use of derivatives really decrease risks of financial institutions?” and “Do financial institutions have a phenomenon of overused derivatives?”
This research aims to explore the impact of European sovereign debt crisis on derivatives hedge disclosure quality.Refer to Li2008, we use readability index to investigate whether the readability became worse after the European sovereign debt crisis happened in 2010.
The results show that derivatives hedge disclosure readability is more complex after 2010.It means that European sovereign debt crisis contribute to higher operational risk and decreased hedging effectiveness. In order to conceal the unfavorable performance, managers reduced disclosure quality. In this way, managers can confuse the user of finance report.
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