Hedge Funds Likely To Benefit From IFRS Introduction

by Glen Shapiro, LawAndTax-News.com, New York

02 November 2004

According to a Dow Jones Newswires report, hedge funds are eagerly anticipating the introduction of International Financial Reporting Standards (IFRS) in the European Union in 2005, believing that the increased reporting requirements under the new rules will benefit fund managers employing certain strategies.

Although the new Standards contain many other changes to accounting regulations, including a new obligation to expense stock options and stricter terms for capitalising costs, Paolo di Montorio-Veronese, head of the PdMV hedge fund management group, revealed that the most exciting prospect is that:

"The introduction of IFRS for listed companies in Europe from Jan. 1, will in some cases double the amount of information companies disclose."

Although such a development is most likely to benefit long-short equity, equity market neutral, merger arbitrage and convertible arbitrage hedge funds, Mr Montorio-Veronese told Dow Jones that the release of more detailed information on corporate performance by European firms could also benefit hedge fund managers who are "skilled in integrating quantitative analysis and qualititative assessment of companies".

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