Determinants of hedging: a review of theoretical studies
Hedging instruments are deemed as value enhancing tool for both financial and non financial firms. The aim of this study is to highlight those theoretical studies which are written in context of hedging determinants. Theoretical studies argued that in a world with no taxes, no transaction costs, and...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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2017
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| Online Access: | https://repo.uum.edu.my/id/eprint/26253/1/JIFM%202%205%202017%2092%20101.pdf |
| _version_ | 1825805439412994048 |
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| author | Omar, Abdullah Taufil Mohd, Kamarun Nisham Ahmad, Norzalina |
| author_facet | Omar, Abdullah Taufil Mohd, Kamarun Nisham Ahmad, Norzalina |
| author_sort | Omar, Abdullah |
| collection | UUM |
| description | Hedging instruments are deemed as value enhancing tool for both financial and non financial firms. The aim of this study is to highlight those theoretical studies which are written in context of hedging determinants. Theoretical studies argued that in a world with no taxes, no transaction costs, and with fixed investment policies, hedging with derivatives is irrelevant to firm value. However, some studies suggests that derivative instruments can increase firm value when the premises of a perfect market have been relaxed, since they can eliminate corporate tax liabilities, financial distress costs, dependence on costly external financing, and agency costs. |
| first_indexed | 2024-07-04T06:32:20Z |
| format | Article |
| id | uum-26253 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:32:20Z |
| publishDate | 2017 |
| record_format | eprints |
| spelling | uum-262532019-07-25T02:57:15Z https://repo.uum.edu.my/id/eprint/26253/ Determinants of hedging: a review of theoretical studies Omar, Abdullah Taufil Mohd, Kamarun Nisham Ahmad, Norzalina HG Finance Hedging instruments are deemed as value enhancing tool for both financial and non financial firms. The aim of this study is to highlight those theoretical studies which are written in context of hedging determinants. Theoretical studies argued that in a world with no taxes, no transaction costs, and with fixed investment policies, hedging with derivatives is irrelevant to firm value. However, some studies suggests that derivative instruments can increase firm value when the premises of a perfect market have been relaxed, since they can eliminate corporate tax liabilities, financial distress costs, dependence on costly external financing, and agency costs. 2017 Article PeerReviewed application/pdf en cc4_by https://repo.uum.edu.my/id/eprint/26253/1/JIFM%202%205%202017%2092%20101.pdf Omar, Abdullah and Taufil Mohd, Kamarun Nisham and Ahmad, Norzalina (2017) Determinants of hedging: a review of theoretical studies. Journal of Insurance and Financial Management, 2 (5). pp. 92-101. ISSN 2371-2112 https://journal-of-insurance-and-financial-management.com/index.php/JIFM/article/view/75 |
| spellingShingle | HG Finance Omar, Abdullah Taufil Mohd, Kamarun Nisham Ahmad, Norzalina Determinants of hedging: a review of theoretical studies |
| title | Determinants of hedging: a review of theoretical studies |
| title_full | Determinants of hedging: a review of theoretical studies |
| title_fullStr | Determinants of hedging: a review of theoretical studies |
| title_full_unstemmed | Determinants of hedging: a review of theoretical studies |
| title_short | Determinants of hedging: a review of theoretical studies |
| title_sort | determinants of hedging a review of theoretical studies |
| topic | HG Finance |
| url | https://repo.uum.edu.my/id/eprint/26253/1/JIFM%202%205%202017%2092%20101.pdf |
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