Do trading derivatives classification affect bank holding company’s earnings volatility and firm value?
Carolyn M. Callahan et al.
This study examines the differential impact of bank holding companies (BHCs) that consistently report trading gains (successful speculators) and those that consistently report no gain or trading losses (unsuccessful speculators) on earnings volatility and firm value. Under Accounting Standards Codification (ASC) 815 (previously SFAS 133Accounting for Derivative Instruments and Hedging Activities), all gains/losses related to trading derivatives are recognized in current earnings; whereas, gains/