On the determinants of derivatives disclosure – an emerging markets perspective

Franz Eduard Toerien, John Hall and Leon Brümmer

South African Journal of Accounting Research, 2025, vol. 39, issue 3, 249-265

Abstract: PurposeTo ascertain how JSE-listed companies use derivatives to hedge.AimDetermine whether JSE-listed companies apply established rationales for corporate hedging practices.Design/Methodology/ApproachThis empirical study uses data from the Johannesburg Stock Exchange (JSE), South Africa, as a proxy for emerging markets.Main findingsBinomial logistic regression, applied to the 200 largest non-financial firms (by market capitalization) on the JSE from 2005 to 2017, indicates that larger firms, higher leveraged firms, ones with better growth prospects, and less information asymmetry between directors and management are more likely to use derivatives to hedge.Practical implicationsThe findings suggest that some traditional determinants for corporate hedging practices apply in an emerging market context, but local conditions still remain an important consideration.Novelty/ContributionBy confirming the applicability of traditional hedging theories in an emerging market context, the study extends the theoretical understanding of corporate risk management. It supports the notion that established hedging rationales, such as reducing financial distress costs and addressing information asymmetry, are relevant across different economic contexts.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10291954.2024.2362475 (text/html)
Access to full text is restricted to subscribers.

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:taf:rsarxx:v:39:y:2025:i:3:p:249-265

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rsar20

DOI: 10.1080/10291954.2024.2362475

Access Statistics for this article

South African Journal of Accounting Research is currently edited by Soon Nel

More articles in South African Journal of Accounting Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().