Financial derivatives and firm value: What have we learned?

Patricia Bachiller, Sabri Boubaker and Salma Mefteh-Wali
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Patricia Bachiller: Universidad de Zaragoza = University of Zaragoza [Saragossa University] = Université de Saragosse
Salma Mefteh-Wali: ESSCA Research Lab - ESSCA - ESSCA – École supérieure des sciences commerciales d'Angers = ESSCA Business School

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Abstract: Despite an enormous amount of research on the relationship between financial hedging and firm performance, the literature provides so far no clear-cut findings on whether the use of derivatives results in higher firm valuation. Using a meta-analysis of 51 studies, this research explains whether the absence of a consensus is due to different country specificities and hedging types. The findings show that the use of foreign currency derivatives, alone or along with other types of derivatives, drives firm value positively. They also show that hedging presents an economic advantage for all firms, especially those from common law and developed countries.

Keywords: Derivatives use; Hedging; Firm value; Meta-analysis (search for similar items in EconPapers)
Date: 2021
Note: View the original document on HAL open archive server: https://normandie-univ.hal.science/hal-04455598v1
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Citations: View citations in EconPapers (2)

Published in Finance Research Letters, 2021, 39, pp.101573. ⟨10.1016/j.frl.2020.101573⟩

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Journal Article: Financial derivatives and firm value: What have we learned? (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04455598

DOI: 10.1016/j.frl.2020.101573

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