The picture of company’s synthetic equity capital in financial reporting
Journal Title: Zarządzanie i Finanse - Year 2013, Vol 11, Issue 2
Abstract
This paper presents the results of research focused on the picture of com-pany’s synthetic equity capital in financial reporting. The research was based on the content analysis of annual reports of chosen companies listed within WIG20 index. The main objective was to identify information about the level and cost of synthetic equity – data required to estimate the weighted average cost of capital for the company managing risk (WACCRM) based on the risk capital and total cost of risk concept (TCRM). The results indicate that information about the applied sources of synthetic equity is often available in the annual reports. However, there is no information about its level and cost. This situation can be explained by the regulation and reporting practices that are not adjusted to the requirements of presenting in-formation about the synthetic equity. As a consequence, there is not enough information to estimate the weighted average cost of capital in terms of risk capital concept. These results open new interesting problems for further research within the identification of reasons for the information gap concerning the synthetic equity. As the risk capital concept is relatively new, it cannot be expected that the companies know it and apply in their financial management. However, it would be interesting to find out why there is so little information about insurance programs applied by companies, as they are strictly connected with the risk reporting problem.
Authors and Affiliations
Monika Wieczorek-Kosmala, Joanna Błach
Keywords
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