| Summary: | 碩士 === 國立雲林科技大學 === 會計系 === 107 === Based on income smoothing behaviors, Barton(2001) found that derivativesusage is positively associated with discretionary accruals.Note that derivatives usage can be classified asboth hedging and non-hedging (trading) purposes.This study examineswhether the positive association between derivatives usage and discretionary accruals reveals distinctive patterns in differential purposes of derivatives usage. In addition, this study divides the hedging purposederivatives usage into applicable and not applicable to hedge accounting, which in turn, examines whether the hedge effectiveness affects the association between derivatives usage and discretionary accruals.
Based on Taiwanese listed companies from 2009 to 2016, the empirical results showed that discretionary accruals is positively associated withthe magnitude of hedge purpose derivativesusage. This result is inconsistent with the finding of Barton (2001).Further evidence reveals that this positiveassociation between hedging purpose derivativesusage and discretionary accrualscan be attributed to the hedging purpose derivativesusage that is not applicable forhedge accounting. It suggests that only ineffective hedge derivatives usage triggers managers’ further use discretionary accruals to smooth reporting earnings. It is found that the non-hedging (trading) derivativesusage is unlikely associated with the discretionary accruals.
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