The Effect of Hedging with Financial Derivatives on Firm Value at Indonesia Stock Exchange

Budi Frensidy and Tasya Indah Mardhaniaty
Additional contact information
Budi Frensidy: Department of Accounting, Faculty of Economics and Business, Universitas Indonesia
Tasya Indah Mardhaniaty: Department of Accounting, Faculty of Economics and Business, Universitas Indonesia

Economics and Finance in Indonesia, 2019, vol. 65, 20-32

Abstract: This study aims to analyze the effect of hedging for the risks of foreign currency, interest rate, and commodity price on firm value as measured by Tobin’s Q. The findings reveal that hedging with derivative instruments is insignificantly related to firm value but significantly varied in financial risks. Hedging for foreign currency risk has a significantly positive relation to firm value, while hedging for interest rate and commodity price risk has no relation. Furthermore, this study provides a novelty compared to previous studies in the utilization of the extent of hedging as the variable to measure the implementation of hedging.

Keywords: hedging; derivative instruments; foreign currency risk; interest rate risk; commodity price risk (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://lpem.org/repec/lpe/efijnl/201902.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:201902

Access Statistics for this article

More articles in Economics and Finance in Indonesia from Faculty of Economics and Business, University of Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Muhammad Halley Yudhistira ( this e-mail address is bad, please contact ).