| Summary: | 碩士 === 輔仁大學 === 會計學系碩士班 === 104 === As the evolution of derivative instruments, FASB agrees to add a project to its agenda to reconsider the derivative instruments disclosure requirements of SFAS No.133, specifically because of constituent concerns that those requirements do not provide adequate information on the effect that derivatives have on an entity’s financial position, financial performance, and cash flows. FASB has addressed many of these concerns in developing the objectives and enhanced disclosure framework included in this Statement. In March 2008, FASB issued SFAS No.161 Disclosures about derivative instruments and hedging activities to satisfy the needs of financial statement users. This paper explores whether SFAS.161 would affect readability of financial statement about derivative instruments by means of using Li (2008) readability measurement and other readability indexes and company file size.
This result suggests that the readability of financial statements about derivative instruments become significantly worse after the adoption of SFAS No.161, which means that the financial statements about derivative instruments became more difficult to read. SFAS No.161 required a lot more disclosure requirements about derivative instruments; managements might have incentive to confuse the users of financial statement by using complex words to disclosure, causing the deterioration of readability.
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