Impact of Foreign Currency Derivatives on Value of Chinese Non-financial firms
Author (s)
Md Kamal Hossain & Mammadova Gulay
Abstract
Newly reformed global economy has the widespread of using foreign exchange derivatives as a risk management tool. Recent trends lead Chinese firms into high financial risk, thus inevitable choice for Chinese companies are using derivative for mitigate risks arising from fluctuations. Purpose of this research is to investigate foreign exchange derivatives effect on value for Chinese companies, 36 non-financial company’s data are used as sample and time frame will be 2013-2017. After controlling for several fundamental firm specifications, this study has shown that there is a positive and significant relationship with a simple decision for using foreign currency derivatives and firm value. Furthermore, result shows using foreign exchange derivatives significantly add value of the firms as higher Tobin’s Q ratio. This finding indicates that especially companies with high firm value can further expand their values through actively participating in hedging activities. Results also indicate that foreign exchange derivatives are more likely to raise large corporation’s value. Another finding is that effect of value-enhancing on degree of derivative use of foreign exchange is weaker for profitable firms than for less profitable ones. This means that increasing derivative holdings by more profitable non-financial firms are unlikely to contribute to their performance.
Key words: Chinese Non-financial firms, foreign exchange derivatives, risk management, firm value.
| Title: | Impact of Foreign Currency Derivatives on Value of Chinese Non-financial firms |
|---|---|
| Author: |
Md Kamal Hossain & Mammadova Gulay |
| Journal Name: | Journal of Scientific Reports |
| Website: | https://ijsab.com/jsr |
| Publisher | IJSAB-International |
| DOI: | https://doi.org/10.5281/zenodo.3902144 |
| Media: | Online |
| Volume: | 2 |
| Issue: | 1 |
| Acceptance Date: | 17/06/2020 |
| Date of Publication: | 20/06/2020 |
| PDF URL: | https://ijsab.com/wp-content/uploads/1012.pdf |
| Free download: | Available |
| Page: | 78-96 |
| First Page: | 78 |
| Last Page: | 96 |
| Paper Type: | Research Paper |
| Current Status: | Published |
Cite This Article:
Md Kamal Hossain & Mammadova Gulay (2020). Impact of Foreign Currency Derivatives on Value of Chinese Non-financial firms. Journal of Scientific Reports, 2(1), 78-96. doi: https://doi.org/10.5281/zenodo.3902144
Retrieved from https://ijsab.com/wp-content/uploads/1012.pdf
About Author (s)
Md Kamal Hossain (Corresponding Author), Masters of Economics, University of International Business and Economics (UIBE), China.
Mammadova Gulay, Masters of Finance, University of International Business and Economics (UIBE), China.
DOI: https://doi.org/10.5281/zenodo.3902144