Access the full text.
Sign up today, get DeepDyve free for 14 days.
Loading next page...
/lp/sage/further-evidence-on-the-corporate-use-of-derivatives-in-australia-the-b4hcavUX8t
References (14)
-
Christopher Géczy, Bernadette Minton, Catherine Schrand (1996)
Why Firms Use Currency DerivativesOhio State University
-
Hoa Nguyen, R. Faff (2002)
On The Determinants of Derivative Usage by Australian CompaniesAustralian Journal of Management, 27
-
Shawton Howton, Steven Perfect (1998)
Currency and Interest-Rate Derivatives Use in US FirmsFinancial Management, 27
-
James Ang, J. Chua, John Mcconnell (1982)
The Administrative Costs of Corporate Bankruptcy: A NoteJournal of Finance, 37
-
René Stulz (1984)
Optimal Hedging PoliciesJournal of Financial and Quantitative Analysis, 19
-
G. Haushalter, J. Chalmers, Diane Guercio, Larry Dann, David Denis, Diane Denis, George Fenn, J. Harford, Randy Heron, Timothy Kruse, E. Lie, Peter Mackay, P. McCarthy, M. Partch, M. Petersen, G. Phillips, Sunil This (2000)
Financing Policy, Basis Risk, and Corporate Hedging: Evidence from Oil and Gas ProducersJournal of Finance, 55
-
P. Tufano (1996)
Who Manages Risk? An Empirical Examination of Risk Management Practices in the Gold Mining IndustryJournal of Finance, 51
-
Anne Beatty (1999)
Assessing the use of derivatives as part of a risk-management strategyJournal of Accounting and Economics, 26
-
Clifford Smith, René Stulz (1985)
The Determinants of Firms' Hedging PoliciesJournal of Financial and Quantitative Analysis, 20
-
H. Berkman, M. Bradbury (1996)
Empirical Evidence on the Corporate Use of DerivativesFinancial Management, 25
-
Kenneth Froot, D. Scharfstein, J. Stein (1992)
Risk Management: Coordinating Corporate Investment and Financing PoliciesRisk Management eJournal
-
W. Guay (1999)
The impact of derivatives on firm risk: An empirical examination of new derivative users 1 I gratefuJournal of Accounting and Economics
-
Deana Nance, Clifford Smith, C. Smithson (1993)
On the Determinants of Corporate HedgingJournal of Finance, 48
-
H. Berkman, M. Bradbury, P. Hancock, Claire Innes (2002)
Derivative Financial Instrument Use in AustraliaRisk Management eJournal
- Publisher
- SAGE
- Copyright
- Copyright © by SAGE Publications
- ISSN
- 0312-8962
- eISSN
- 1327-2020
- DOI
- 10.1177/031289620302800305
- Publisher site
- See Article on Publisher Site
Abstract
In a recent issue of this journal Nguyen and Faff (2002) reported on an empirical exploration of the motives behind the aggregate use of financial derivatives by Australian companies. Employing the same sample of firms, the current paper extends their analysis to investigate similar issues, this time focussing separately on foreign currency and interest rate derivatives. At a specific level, our results reveal the following. A firm is more likely to use foreign currency derivatives if it is large and has more debt in its capital structure. Interest rate derivatives, on the other hand, are more likely to be used if a firm is larger, more levered, more liquid and pays higher dividends. These results are consistent with existing hedging theories. Market to book value (proxying growth opportunities), however, portrays an inconsistent relationship with the likelihood of interest rate derivative usage. When it comes to the extent of usage, a firm uses foreign currency derivatives more extensively if it is smaller, pays higher dividends and has more debt. Similarly, interest rate derivatives are used more extensively to address a high level of debt and a high dividend payout policy. At a general level, the current study confirms the core finding of Nguyen and Faff (2002), namely, that Australian companies use derivatives with a view to value maximisation.
Journal
Australian Journal of Management – SAGE
Published: Dec 1, 2003