The application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009

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dc.contributor.advisorde Jager, Phillip
dc.contributor.authorModimakwane, Winnie Tebogo
dc.date.accessioned2021-02-11T13:26:06Z
dc.date.available2021-02-11T13:26:06Z
dc.date.issued2020
dc.date.updated2021-02-11T13:25:41Z
dc.description.abstractThe International Accounting Standard Board (IASB) introduced an amendment to the International Accounting Standard 39 – Financial Instruments: Recognition and Measurement (IAS 39) and to International Financial Reporting Standard 7 – Financial Instruments: Disclosures (IFRS 7) on 13 October 2008. These amendments allowed entities to reclassify non-derivative financial assets from the fair value option to historical cost. The purpose of this study is to explore how Global Systemically Important Banks (G-SIBs) applied the amendment to IAS 39 since 2008/2009. The study is guided by four main objectives in which the first two objectives explores how the G-SIBs applied the reclassifications during the allowed period, 2008/2009 and the period beyond 2009 when the application of the standard should have been stopped. The study further investigates if any G-SIBs used restatements to circumvent the requirements of the IAS 39 that does not allow reclassifications into and out of the ‘designated as at fair value' category. Finally, the study explores the impacts of the reclassifications on the G-SIBs' ROE and total regulatory capital with the aim to determine if G-SIBs reaped any long-term benefits from the reclassifications and whether any traces of earning and capital management exist in the way G-SIBs applied the amendment to IAS 39. To achieve these objectives a comparative case study approach, which is qualitative in nature/scope was used with 10 G-SIBS forming part of the units of the analysis of the study. The study finds that: (i) 70 percent of G-SIBs reclassified assets during 2008/2009; (ii) a significant improvement on the reported net income was observed with a slight improvement on the return on equity and regulatory capital during 2008/2009, while the long-term impacts on ROE and total capital are insignificant; and (iii) G-SIBs did not restate comparative figures to evade the prohibition on reclassifications into and out of the ‘designated as at fair value' category. As far as can be reasonably established, this kind of study has not been published before for G-SIBs. As such, the study contributes by including the analysis of G-SIBs and the long-term implications of applying the amendment to IAS 39 to the current literature, as well as adding another possible type of a restatement to the financial restatements' literature. All these aspects are currently lacking in the existing literature.
dc.identifier.apacitationModimakwane, W. T. (2020). <i>The application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009</i>. (). ,Faculty of Commerce ,Department of Finance and Tax. Retrieved from http://hdl.handle.net/11427/32815en_ZA
dc.identifier.chicagocitationModimakwane, Winnie Tebogo. <i>"The application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009."</i> ., ,Faculty of Commerce ,Department of Finance and Tax, 2020. http://hdl.handle.net/11427/32815en_ZA
dc.identifier.citationModimakwane, W.T. 2020. The application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009. . ,Faculty of Commerce ,Department of Finance and Tax. http://hdl.handle.net/11427/32815en_ZA
dc.identifier.ris TY - Master Thesis AU - Modimakwane, Winnie Tebogo AB - The International Accounting Standard Board (IASB) introduced an amendment to the International Accounting Standard 39 – Financial Instruments: Recognition and Measurement (IAS 39) and to International Financial Reporting Standard 7 – Financial Instruments: Disclosures (IFRS 7) on 13 October 2008. These amendments allowed entities to reclassify non-derivative financial assets from the fair value option to historical cost. The purpose of this study is to explore how Global Systemically Important Banks (G-SIBs) applied the amendment to IAS 39 since 2008/2009. The study is guided by four main objectives in which the first two objectives explores how the G-SIBs applied the reclassifications during the allowed period, 2008/2009 and the period beyond 2009 when the application of the standard should have been stopped. The study further investigates if any G-SIBs used restatements to circumvent the requirements of the IAS 39 that does not allow reclassifications into and out of the ‘designated as at fair value' category. Finally, the study explores the impacts of the reclassifications on the G-SIBs' ROE and total regulatory capital with the aim to determine if G-SIBs reaped any long-term benefits from the reclassifications and whether any traces of earning and capital management exist in the way G-SIBs applied the amendment to IAS 39. To achieve these objectives a comparative case study approach, which is qualitative in nature/scope was used with 10 G-SIBS forming part of the units of the analysis of the study. The study finds that: (i) 70 percent of G-SIBs reclassified assets during 2008/2009; (ii) a significant improvement on the reported net income was observed with a slight improvement on the return on equity and regulatory capital during 2008/2009, while the long-term impacts on ROE and total capital are insignificant; and (iii) G-SIBs did not restate comparative figures to evade the prohibition on reclassifications into and out of the ‘designated as at fair value' category. As far as can be reasonably established, this kind of study has not been published before for G-SIBs. As such, the study contributes by including the analysis of G-SIBs and the long-term implications of applying the amendment to IAS 39 to the current literature, as well as adding another possible type of a restatement to the financial restatements' literature. All these aspects are currently lacking in the existing literature. DA - 2020 DB - OpenUCT DP - University of Cape Town KW - Capital Management KW - Earnings Management KW - Fair value accounting KW - G-SIBs KW - IAS 39 KW - net income KW - reclassifications KW - regulatory capital KW - restatements LK - https://open.uct.ac.za PY - 2020 T1 - The application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009 TI - The application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009 UR - http://hdl.handle.net/11427/32815 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/32815
dc.identifier.vancouvercitationModimakwane WT. The application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009. []. ,Faculty of Commerce ,Department of Finance and Tax, 2020 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/32815en_ZA
dc.language.rfc3066eng
dc.publisher.departmentDepartment of Finance and Tax
dc.publisher.facultyFaculty of Commerce
dc.subjectCapital Management
dc.subjectEarnings Management
dc.subjectFair value accounting
dc.subjectG-SIBs
dc.subjectIAS 39
dc.subjectnet income
dc.subjectreclassifications
dc.subjectregulatory capital
dc.subjectrestatements
dc.titleThe application of IAS 39 reclassifications by global systemically important banks (G-SIBs) since 2008/2009
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationlevelMCom
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