Does Hedge Accounting Under SFAS 133 Increase the Information Content of Earnings: Evidence From the U.S. Oil and Gas Industry

This article examines the information content of reported earnings for a sample of U.S. oil and gas firms that use hedge accounting, under Statement of Financial Accounting Standards (SFAS) 133 and International Accounting Standard (IAS) 39. The study finds that for firms that use hedge accounting, earnings are more informative about firm value and risk exposure than firms that do not use hedge accounting. The study also finds that firms that use hedge accounting and are effectively using derivatives have higher firm value than other firms in the study sample. (c) 2016 Wiley Periodicals, Inc.