Analysing and estimating accounting entries for foreign exchange hedges: management accountants´ viewpoint
Kiljunen, Kaisa (2021)
Kiljunen, Kaisa
2021
Kauppatieteiden maisteriohjelma - Master's Programme in Business Studies
Johtamisen ja talouden tiedekunta - Faculty of Management and Business
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Hyväksymispäivämäärä
2021-04-26
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202104142976
https://urn.fi/URN:NBN:fi:tuni-202104142976
Tiivistelmä
Foreign exchange (FX) hedging is common in today´s global markets. It is usually executed using derivatives, such as forwards and swaps. Previous studies have emphasized the importance of the monetary outcome of hedging, the internal monitoring and analysis of derivatives and relevant and timely information on the use of derivatives. In addition, the role of management accountants in risk management has been highlighted as important, although the relationship between management accounting and risk management has not received attention in empirical research.
The purpose of this research was to study the analysis and estimation of accounting entries for FX hedges from the viewpoint of management accountants. The research was conducted as a qualitative case study. The objective was to identify the needs for analysis and possibilities for estimation in the case company operating in technology industry. As far as is known, the topic had not been studied before, and the theoretical framework was intended to provide an insight into the research topic instead of answers to the research questions. The empirical data were collected mainly through five semi-structured interviews, and the analysis of the data was data-driven.
Several needs for analysis were identified from the empirical data. First, the analysis was considered needed and management accountants were considered to have a key role in it. Particularly accounting entries in the statement of profit and loss and the variance these entries cause were considered necessary to analyse. The particular needs for analysis identified from the empirical data were divided into three categories: knowledge and expertise, data analysis and reports and targets.
Some possibilities for the estimation of the accounting entries were also identified. Estimating accounting entries for the forward elements of derivatives was considered possible at a rough level. Instead, possibilities to estimate entries for spot elements were considered limited. The need for an increased understanding of derivatives and their accounting was a central theme in terms of both the needs for analysis and possibilities for estimation. The research results can be used in the case company when developing processes. This research was also able to contribute to the need for empirical research on the relationship between management accounting and risk management, although there is uncertainty about the applicability of the results outside the case company.
The purpose of this research was to study the analysis and estimation of accounting entries for FX hedges from the viewpoint of management accountants. The research was conducted as a qualitative case study. The objective was to identify the needs for analysis and possibilities for estimation in the case company operating in technology industry. As far as is known, the topic had not been studied before, and the theoretical framework was intended to provide an insight into the research topic instead of answers to the research questions. The empirical data were collected mainly through five semi-structured interviews, and the analysis of the data was data-driven.
Several needs for analysis were identified from the empirical data. First, the analysis was considered needed and management accountants were considered to have a key role in it. Particularly accounting entries in the statement of profit and loss and the variance these entries cause were considered necessary to analyse. The particular needs for analysis identified from the empirical data were divided into three categories: knowledge and expertise, data analysis and reports and targets.
Some possibilities for the estimation of the accounting entries were also identified. Estimating accounting entries for the forward elements of derivatives was considered possible at a rough level. Instead, possibilities to estimate entries for spot elements were considered limited. The need for an increased understanding of derivatives and their accounting was a central theme in terms of both the needs for analysis and possibilities for estimation. The research results can be used in the case company when developing processes. This research was also able to contribute to the need for empirical research on the relationship between management accounting and risk management, although there is uncertainty about the applicability of the results outside the case company.