The Influence of the Board of Directors and the Auditor in the Disclosure of Derivative Financial Instruments: Evidence on Portuguese Capital Market

Purpose – This article aims to analyze the influence of certain characteristics of the board of directors and the auditor on the disclosure of derivative financial instruments. Theoretical framework – Operations with derivative instruments are associated with high risks, so the disclosure of these operations and their results helps to reduce information asymmetries. On the other hand, acccording to agency theory, the characteristics of the board of directors and of the auditor can affect the quality and the level of financial information disclosed. Design/methodology/approach – The data were obtained through content analysis, considering the 2017 reports and accounts of 37 companies listed on Euronext Lisbon, through a disclosure index. Subsequently, a multiple linear regression model was developed to identify the determinants of the level of disclosure about derivative instruments. Findings – The results revealed that only the number of independent members on the board of directors, the auditor's gender, and the size of the entity influence the level of disclosure about derivative instruments. Research, Practical & Social implications – This study may be useful for regulators in setting disclosure requirements for derivative instruments and useful in companies' decision making in defining the members of the board and the auditor. Originality/value – It contributes to the literature on compliance with IFRS and contributes to the perception of the influence of certain characteristics associated with the board of directors and the auditor in the disclosure of derivative instruments