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The effects of presentation of unrealized gain or loss of equity instruments on investing decision of investors

Author

Listed:
  • Chin Yee Gan

    (Multimedia University Malaysia)

  • Lee Lee Chong

    (Asia Pacific University of Technology & Innovation)

  • Zauwiyah Ahmad

    (Multimedia University Malaysia)

Abstract

Unrealised gain or loss of equity instruments are one of the most important component of statement of comprehensive income for insurance companies. However, IFRS 9 financial instruments standard allows an option on presenting unrealised gain or loss of equity instruments in either statement of profit or loss or statement of other comprehensive income if the equity investment is invested for strategic purpose. This has caused confusion as many users incorporate only total for profit or loss in their analysis, and overlook items presented in other comprehensive income statement. Besides, the volatilities of unrealised gain or loss of equity instruments make statement of comprehensive income volatile and affect investors' decision making. The objective of this study is to examine how presentation of unrealised gain or loss of equity instruments affect investors' decision making, and the interactive effect among presentation of unrealised gain or loss of equity instruments and volatility of unrealised gain or loss of equity instruments on investors' decision making. This is a study which incorporates the behavioural aspects of investors on effects of IFRS 9 adoption of financial reporting. The finding is useful to IASB to improve the content of statement of financial performance ensuring its relevancy and reliability.

Suggested Citation

  • Chin Yee Gan & Lee Lee Chong & Zauwiyah Ahmad, 2023. "The effects of presentation of unrealized gain or loss of equity instruments on investing decision of investors," Economics Bulletin, AccessEcon, vol. 43(1), pages 265-279.
    • Handle: RePEc:ebl:ecbull:eb-21-00892
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    unrealised gain or loss; equity instruments; insurance companies; statement of comprehensive income; investing decision.;
    All these keywords.

    JEL classification:

    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • G3 - Financial Economics - - Corporate Finance and Governance

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