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Factors that Affect the Derivatives Usage of Non-Financial Listed Firms of Pakistan to Hedge Foreign Exchange Exposure

Journal of Banking and Financial Dynamics

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Title Factors that Affect the Derivatives Usage of Non-Financial Listed Firms of Pakistan to Hedge Foreign Exchange Exposure
 
Creator Khan, Numan
Ali, Khurshid
Kiran, Alina
Mubeen, Riaqa
Khan, Zeeshan
Ali, Nasir
 
Subject —
Foreign exchange exposure, Hedging, Pakistan stock exchange.
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Description This study aims to investigate the factors that affect the derivatives usage of non-financial listed firms of Pakistan to hedge foreign exchange exposure by using data of 51 non-financial firms listed on Pakistan stock exchange from 2010-2013. The dependent variable was derivative usage which was used as dummy since no financial information was disclosed in company annual reports but the decision of usage or not. Non-parametric tests were uses which is univariate analysis to calculate the mean difference between users and non-users of derivative usage for hedging purposes. Further, logistic regression model was used to analyze the impact of financial distress costs, tax convexity, underinvestment problem, profitability, managerial holdings of the company and  foreign sales on firm’s decision to whether they use FX derivatives for hedging purposes or not. The result shows that financially distressed firms, having lower managerial holdings and lower interest coverage ration with high foreign sales are using FX derivatives in Pakistan.
 
Publisher Journal of Banking and Financial Dynamics
 
Contributor —
 
Date 2016-11-25
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
audio/mpeg
text/html
 
Identifier http://www.asianonlinejournals.com/index.php/JBFD/article/view/909
10.20448/journal.525/2017.1.1/525.1.9.20
 
Source Journal of Banking and Financial Dynamics; Vol 1, No 1 (2017); 9-20
 
Language eng
 
Relation http://www.asianonlinejournals.com/index.php/JBFD/article/view/909/pdf
http://www.asianonlinejournals.com/index.php/JBFD/article/view/909/620
http://www.asianonlinejournals.com/index.php/JBFD/article/view/909/html
 
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