An Investigation of Derivative Financial Instrument Usage by the UK's Largest Non-financial Firms

  • Kurukulasuriya Marakkalage Anjana Gayan Kurukulasuriya

Student thesis: Doctoral ThesisPhD


The subject of derivatives use and their accounting is one of the most controversial and complex topics in accounting. In recent times, there have been too many scandals involving the use, abuse and misuse of derivatives. This has highlighted the importance of disclosing these instruments in financial statements rather than holding them off-balance sheet.

The purpose of this study is to examine the extent and nature of derivatives usage amongst UK non-financial firms. The sample covers the pre- and post-financial crisis years where the study finds significant variance in the level of usage but not significant variance in the determinants of usage.

Following this, the study provides details regarding the determinants and value relevance of derivatives use; it exploits the data to perform analysis across hedging instruments and types. Finally, employing a unique identification process, the study investigates whether financial analysts understand and use financial accounting information about derivatives.

The importance of this study is twofold. Firstly, the economic significance of derivatives and secondly, the theoretical importance of derivatives. To date, the IFRS derivatives fair value regime has remained largely untouched by empirical researchers. This study fills this vacuum, covering a financial meltdown and a recovery period. This would have direct benefits to UK financial markets in terms of providing much needed research into this area. Further, the methodologies used and the results of this study can be of particular importance to researchers and practitioners alike.
Date of Award13 Feb 2019
Original languageEnglish
Awarding Institution
  • University of Bath
SupervisorRichard Jackson (Supervisor) & Matt Bamber (Supervisor)


  • Derivatives
  • Financial Instruments
  • International Financial Reporting Standards
  • IFRS
  • Hedge
  • Fair value
  • FTSE
  • Disclosure
  • Reporting

Cite this