Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Making information available to shareholders and investors

24.06.2008
In view of the recent collapse of firms through derivative use, shareholders and potential investors need to know what to look for in the annual reports of firms in which they have an interest.

The annual report is the only document that has been put in the public domain from which members of the public can know whether their firms have indeed been using derivatives to manage risk or to speculate.

However, many firms are not disclosing the information required by shareholders in order to be able to observe the hedging process i.e. what managers do with derivatives.

Knowing what to look for in companies’ annual reports will help shareholders to be able to make rational economic decisions of which companies’ shares they should invest in.

This project is investigating the impact of recent changes in international reporting standards that demand some disclosure in the accounts of a firm's use of derivative products.

Liafisu Sina Yekini, a PhD student working on the Leicester research project, explained: “Large firms in the UK use complex financial instruments called derivatives to manage/hedge financial risks they face.

“Shareholders invest in firms because they expect some benefits in shareholding in the firms. These benefits are either in form of increased market value of the shares of these companies or in form of income derivable from profit made by them.

“In a nut shell, shareholders expect their firms to be a ‘growth’ as well as ‘income’ generating firms.

“Recent happenings in organisations have made the above the ideal or the theoretical expectations of shareholders who have invested their savings in the purchase of the shares in these firms.

“Shareholders must therefore know that by investing in the shares of these companies they are linking their financial wealth or indeed financial bankruptcy/liquidation with that of these firms.

“Managers undertake various decisions on behalf of the shareholders in firms in their attempt to achieve the firms’ objective explained above. One of such decisions is how to manage the risk that firms face."

A fellow of the Institute of Chartered Accountants, Sina Yekini qualified with Arthur Andersen and Co after which he joined the banking industry for a period of more than 10 years, mostly at management level.

Following his exposure both in practice and in the banking industry, Sina decided to explore issues that are controversial between theory and practice of accounting and finance, hence his enrolment with the University of Leicester for MSc in finance and now Ph D in accounting and finance (on going). He had earlier graduated with B. Sc in Accounting in 1988.

His research interest can be broadly grouped around risk management, foreign currency derivatives, the hedging process, information asymmetry and the accounting regulation.

The research is being presented to the public at the University of Leicester on Thursday 26th June. The Festival of Postgraduate Research introduces employers and the public to the next generation of innovators and cutting-edge researchers, and gives postgraduate researchers the opportunity to explain the real world implications of their research to a wide ranging audience.

More information about the Festival of Postgraduate Research is available at: www.le.ac.uk/gradschool/festival

Ather Mirza | alfa
Further information:
http://www.le.ac.uk/gradschool/festival

More articles from Business and Finance:

nachricht Is there a bubble in the art market?
07.01.2016 | Universität Luxemburg - Université du Luxembourg

nachricht Finance: Belief in higher returns from private equity may be misplaced
13.10.2015 | Universität Luxemburg - Université du Luxembourg

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Production of an AIDS vaccine in algae

Today, plants and microorganisms are heavily used for the production of medicinal products. The production of biopharmaceuticals in plants, also referred to as “Molecular Pharming”, represents a continuously growing field of plant biotechnology. Preferred host organisms include yeast and crop plants, such as maize and potato – plants with high demands. With the help of a special algal strain, the research team of Prof. Ralph Bock at the Max Planck Institute of Molecular Plant Physiology in Potsdam strives to develop a more efficient and resource-saving system for the production of medicines and vaccines. They tested its practicality by synthesizing a component of a potential AIDS vaccine.

The use of plants and microorganisms to produce pharmaceuticals is nothing new. In 1982, bacteria were genetically modified to produce human insulin, a drug...

Im Focus: The most accurate optical single-ion clock worldwide

Atomic clock experts from the Physikalisch-Technische Bundesanstalt (PTB) are the first research group in the world to have built an optical single-ion clock which attains an accuracy which had only been predicted theoretically so far. Their optical ytterbium clock achieved a relative systematic measurement uncertainty of 3 E-18. The results have been published in the current issue of the scientific journal "Physical Review Letters".

Atomic clock experts from the Physikalisch-Technische Bundesanstalt (PTB) are the first research group in the world to have built an optical single-ion clock...

Im Focus: Goodbye ground control: autonomous nanosatellites

The University of Würzburg has two new space projects in the pipeline which are concerned with the observation of planets and autonomous fault correction aboard satellites. The German Federal Ministry of Economic Affairs and Energy funds the projects with around 1.6 million euros.

Detecting tornadoes that sweep across Mars. Discovering meteors that fall to Earth. Investigating strange lightning that flashes from Earth's atmosphere into...

Im Focus: Flow phenomena on solid surfaces: Physicists highlight key role played by boundary layer velocity

Physicists from Saarland University and the ESPCI in Paris have shown how liquids on solid surfaces can be made to slide over the surface a bit like a bobsleigh on ice. The key is to apply a coating at the boundary between the liquid and the surface that induces the liquid to slip. This results in an increase in the average flow velocity of the liquid and its throughput. This was demonstrated by studying the behaviour of droplets on surfaces with different coatings as they evolved into the equilibrium state. The results could prove useful in optimizing industrial processes, such as the extrusion of plastics.

The study has been published in the respected academic journal PNAS (Proceedings of the National Academy of Sciences of the United States of America).

Im Focus: New study: How stable is the West Antarctic Ice Sheet?

Exceeding critical temperature limits in the Southern Ocean may cause the collapse of ice sheets and a sharp rise in sea levels

A future warming of the Southern Ocean caused by rising greenhouse gas concentrations in the atmosphere may severely disrupt the stability of the West...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Symposium on Climate Change Adaptation in Africa 2016

12.02.2016 | Event News

Travel grants available: Meet the world’s most proficient mathematicians and computer scientists

09.02.2016 | Event News

AKL’16: Experience Laser Technology Live in Europe´s Largest Laser Application Center!

02.02.2016 | Event News

 
Latest News

LIGO confirms RIT's breakthrough prediction of gravitational waves

12.02.2016 | Physics and Astronomy

Gene switch may repair DNA and prevent cancer

12.02.2016 | Life Sciences

Using 'Pacemakers' in spinal cord injuries

12.02.2016 | Medical Engineering

VideoLinks
B2B-VideoLinks
More VideoLinks >>>