Determinant Analysis of Hedging Policy (Study on Non-Financial Company)

Abstract

Hedging is one of the alternatives used to minimize risk in the company, especially the risk due to exchange rate fluctuations. It is possible to conduct hedging activities to protect the company from the risk of exchange rate fluctuations. The purpose of this study was to determine the effect of growth, leverage firm size, cash flow and liquidity of the hedging decision on non-financial companies. In this study, measurement companies use hedging or not will be seen in the annual financial statements. The object used in this study were non-financial companies listed in Indonesia Stock Exchange for the period 2015-2017. The analytical method is multiple regression. The results showed that leverage has a significant effect on hedging activity. The cash flow has a negative and significant effect on hedging activity.

Does the growth opportunities have an impact on hedging decision from own-stated companies in Indonesia?

“…According to research from Habibah et al (2020), the company's growth opportunity has a negative effect on hedging decisions. Meanwhile, according to Winasseto & Utami (2019) and Guniarti (2015), growth opportunities have no significant effect on hedging. The emergence of this research gap makes this research interesting to study.…”