THE COMPARABILITY OF IFRS 7 IN THE EUROPEAN BANKING SECTOR

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Abstract

The aim of this paper is to investigate the level of comparability of the IFRS 7 Financial Instruments Disclosure in banks’ annual reports across different European countries (Italy, Spain, France, Germany and UK) from 2007 to 2014. The banking sector seems to be particularly concerned with the issue of financial risks, especially during the most recent global financial crisis. In addition, risk disclosure has led to vigorous debates at both the national and international levels among scholars and standard setters. To test the comparability across countries, we use the van der Tas C index. Our results show that there is a medium level of comparability. Despite the accounting boards’ and authorities’ commitment to regulating this information, there are still substantial differences in the practices of risk disclosure, which have negative effects on comparability. Our results show that an increase in the degree of comparability exists during the observed period but we are still far from a condition of full comparability due to the presence of factors other than regulations that may affect accounting practices. These findings could be helpful for the decisions of institutional regulatory bodies and for investors.

Keywords: IFRS 7, Financial Risks, Comparability, C Index

Received: 15.02.2017

Accepted: 12.04.2017

How to cite this paper: Allini, A., Ferri, L., Maffei, M., & Zampella, A. (2017). The comparability of IFRS 7 in the European banking sector. Corporate Ownership & Control, 14(4), 8-14. https://doi.org/10.22495/cocv14i4art1