Foreign currency derivative use and shareholder value

Belghitar, Yacine; Clark, Ephraim; Mefteh, Salma

doi:10.1016/j.irfa.2012.02.004

Cited by 47 publications

(40 citation statements)

References 82 publications

(96 reference statements)

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“…Existen autores que indican que la relación positiva entre los derivados y el valor de la empresa es débil y no significativa (Belghitar, Clark y Mefteh, 2013;Guay y Kothari, 2003;Jin y Jorion, 2006), e incluso algunos señalan que el uso de estos instrumentos genera un descuento por cobertura (Fauver y Naranjo, 2010;Nguyen y Faff, 2010). Así, por ejemplo, Bartram, Brown y Conrad (2011) encuentran que el uso de derivados impacta positivamente en el valor de la firma; sin embargo, indican que estos resultados son muy sensibles al sesgo de selección de la muestra, a las variables de control escogidas y al método de estimación.…”

Section: Revisión De La Literatura E Hipótesisunclassified

Instrumentos derivados, concentración de propiedad y valor de la firma. Evidencia para Chile

Cid

Bertín

Maquieira³

et al. 2017

El Trimestre

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Background: The use of derivative instruments, as corporate policy to hedge financial risks has a positive impact on the firm value. However, in countries characterized by weak legal protection of the investors' rights and ownership structures highly concentrated, like in Chile, majority shareholders could use this policy to extract wealth from minority shareholders. Methods: Using the Generalized Method of Moments (GMM), this paper analyzes a panel of 133 nonfinancial companies listed on the Santiago de Chile Stock Exchange between 2008 and 2013. Results: The results indicate a positive and statistically significant relationship between the amount of derivatives used and the company value. However, this evidence is conditioned when the majority shareholder (s) keep the control of the company. If the main shareholder or the three major shareholders hold more than 67% of the outstanding shares, then the relationship between the amount of derivatives used and firm value is negative. Conclusion: In analyzing the dynamics between the ownership concentration and the use of derivatives, we findout that when the majority shareholders and the

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Section: Revisión De La Literatura E Hipótesisunclassified

Instrumentos derivados, concentración de propiedad y valor de la firma. Evidencia para Chile

Cid

Bertín

Maquieira³

et al. 2017

El Trimestre

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“…Previous studies commonly use Tobin's Q as a proxy for firm value. Tobin's Q is defined in this study as total book value of assets minus book value of equity plus market value of equity divided by total book value of assets (Fauver and Naranjo, 2010;Belghitar et al, 2013;Jankensgård, 2015).…”

Section: Independent Variablesmentioning

confidence: 99%

An Empirical Investigation on the Use of Derivative Instruments by Industrial Firms in Turkey

Özek¹

2016

JFRS

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This study examines the factors related to the use of derivative instruments by non-financial firms in Turkey. The analysis is based on a sample of 115 firms listed on the Borsa İstanbul Industrial Index (XUSIN) between the years 2009 and 2014. Generally, it is found that derivative instruments are used by 35 percent of the sample. The results from univariate tests and logistic regression analysis show that the use of derivatives is positively associated with leverage and firm size. In addition, earnings volatility and net profit margin are negatively associated with the firm use of derivatives. However the data does not provide sufficient evidence linking the use of derivative instruments to the firm value.

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“…The higher the financial distress, the more volatile the net cash flow of the company so that the greater the motivation for implementing hedging policies (Bartram et al, 2010;Sprčić, 2011;Afza & Alam, 2016;Bodroastuti et al, 2019). However, several studies conclude that financial distress does not affect the company's hedging policies, because financial distress is not significant compared to the value of the company (Belghitar et al, 2013;Chaudhry et al, 2014;Nuzul & Lautania, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…Companies that have liquid assets tend not to be burdened with business risk and needless hedging instruments because they have hedging substitutes (Clark & Judge, 2009;Afza & Alam, 2016). The role of capital market imperfections in determining the demand for hedging (Belghitar et al, 2013). If access to external financing is expensive, companies with investment projects that require financing will hedge their cash flows to avoid losses, and immediately enter the capital market (Clark & Mefteh, 2011;Fitriasari, 2011;Chanzu & Gekara, 2014;Robiyanto et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

The Effect of Agency Costs on Hedging Policy in Indonesian Public Companies

Paranita

Aditya

2020

JDM

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The purpose of this study is to examine the effect of agency costs on company hedging policies. This study use the concept of hedging policies derived from synchronizing foreign exchange derivatives based on agency theory and hedging with foreign exchange debt based on balancing theory. The novelty of this research is the application of the synthesis of agency theory and balancing theory as indicators of hedging policies. The hedging policy based on foreign exchange derivatives is synchronized with the hedging policy based on foreign debt. The population was companies listed on the Indonesia Stock Exchange (IDX) in 2012-2017. Using the purposive sampling method, 78 companies for each year from 2012 - 2017 were obtained with a total of 468 data. This research used a panel data regression method. The hypotheses were tested with the Hausman Test, which shows the best research model is the Fixed Effect Model. The results of the study concluded that financial distress and underinvestment had a significant positive effect on hedging policies, while business risk did not affect hedging policies because most companies had relatively low foreign sales. The findings of this study have theoretical implications that support agency and balancing theory.

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Foreign currency derivative use and shareholder value

Cited by 47 publications

References 82 publications

Instrumentos derivados, concentración de propiedad y valor de la firma. Evidencia para Chile

Instrumentos derivados, concentración de propiedad y valor de la firma. Evidencia para Chile

An Empirical Investigation on the Use of Derivative Instruments by Industrial Firms in Turkey

The Effect of Agency Costs on Hedging Policy in Indonesian Public Companies

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