A Compliance Study of Hedge Accounting Practices by the BSE-Sensex Companies

The current study examines the level of hedge accounting compliance with Ind AS 107 and Ind AS 109 among BSE-Sensex companies and investigates the firm-specific determinants influencing such compliance. The study was based on the content analysis method and constructed a compliance index based on disclosure requirements relating to hedge accounting practices in the annual reports of BSE-Sensex companies. The study used descriptive analysis, sector-wise analysis, and multiple regression techniques to examine the extent of compliance and its determinants. The findings of the study show that there is a significant difference in disclosure levels across companies and sectors. The regression results indicate that firm size has a positive and statistically significant impact on the hedge accounting compliance score; on the other hand, leverage exhibits a strong negative relationship. However, foreign revenue exposure does not significantly influence compliance levels. The regression model explains 57.1% of the variation in the compliance level due to independent variables. The results suggest that firm size and leverage play an important role in the level of hedge accounting disclosure.