The Effect of Hedging Practices toward Earnings Volatility and the Implementation of Hedge Accounting (A Study at PT. Bank Negara Indonesia Tbk)

KHAIRUL, NADIA AZARINE (2010) The Effect of Hedging Practices toward Earnings Volatility and the Implementation of Hedge Accounting (A Study at PT. Bank Negara Indonesia Tbk). Other thesis, FAKULTAS EKONOMI.

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Abstract

Banks are financial industries which dealing with the financial instrument. They use financial instruments especially derivatives for trading and hedging purposes. The use of financial instrument significantly affects their risk management decisions. Hedging practices become the most common ways in reducing some risks in order to prevent earnings. However some previous researches indicate that the improper planning and some types of transactions on hedging practices might increase the risk itself. This research analyzes the implementation, disclosure and its affect toward earnings volatility of hedge practices and its accounting treatment in PT. Bank Negara Indonesia (BNI). The study result shows that the hedging practices in BNI from year of 2006 - 2010 have proved that hedging practices reduces the earnings volatility. BNI also disclose their hedge accounting treatment based on the PSAK (Pernyataan Standar Akuntansi Keuangan) no. 55 revision of 2006. BNI hedging practices is one of the strategies to minimize the risks. All of the critical terms related to the hedging practices in BNI are already matching with principle based on the standards.

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