The Real Effects of IFRS 9 Hedge Accounting Standards: Evidence from Canadian Firms

Sammanfattning

Compared with the rigid, rule-based hedge accounting requirements under IAS 39, IFRS 9 introduced a more principles-based framework intended to reduce compliance burdens and better align firms' accounting decisions with underlying hedging activities. This study examines the real effects of IFRS 9's hedge accounting reforms on firms' risk management behaviors and financial outcomes. Using descriptive statistics and difference-in-differences regressions based on hand-collected data for Canadian non-financial listed firms from 2011 to 2024, we find that IFRS 9 leads to increased use of hedge-accounted derivatives and greater hedging effectiveness, as reflected in reductions in risk exposure and cash flow volatility. We also observe the absence of significant incremental effects on debt financing and investment, which is contrary to our hypothesis. In addition, we compare our IFRS findings with prior evidence on ASU 2017-12 under U.S. GAAP (Ali et al., 2025) to provide contextual benchmarking of the real effects of hedge accounting reforms across accounting regimes. Overall, this study provides new empirical evidence on the real effects of IFRS 9 hedge accounting standards and offers insights into how accounting reforms shape corporate risk management strategies.