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Do enhanced derivative disclosures work? An informational perspective

He, G.; Ren, H.M.; Taffler, R.


H.M. Ren

R. Taffler


Firms use derivatives both for hedging and nonhedging purposes. The Statement of Financial Accounting Standards No. 161 (SFAS 161) requires firms to disclose the purposes of their derivatives usage, thereby helping investors to evaluate the effects of derivatives usage on firm performance. Using a hand-collected sample of US listed firms and a difference-in-differences research design, we find that, compared with nonderivative-users, derivative-users compliant with SFAS 161 experience a significantly greater reduction in stock illiquidity and the probability of informed trading in the post-SFAS 161 period, and such impact is evident only for firms with a high degree of investor attention.


He, G., Ren, H., & Taffler, R. (2022). Do enhanced derivative disclosures work? An informational perspective. Journal of Futures Markets, 42(1), 24-60.

Journal Article Type Article
Acceptance Date Sep 12, 2021
Online Publication Date Sep 28, 2021
Publication Date 2022-01
Deposit Date Sep 12, 2021
Publicly Available Date Sep 29, 2023
Journal Journal of Futures Markets
Print ISSN 0270-7314
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 42
Issue 1
Pages 24-60
Public URL