A Survey on the Usage of Derivatives and Their Effect on Cost of Equity Capital

Ameer, Rashid; Rosiatimah,; Abdullah, Azrul

doi:10.3905/jod.2011.2011.1.013

Cited by 9 publications

(14 citation statements)

References 48 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Due to this, this study perceives that the transparency and richness of the information regarding the utilization of derivatives on hedging activities is still insufficient. As a consequence, users of the financial statements (especially investors) may be misled and cannot fully analyse, understand or assess the character and impact of the companies using derivatives for hedging their financial risk exposure (see Ameer et al, 2011;Papa and Peter 2013). However, there are some space and ways for an improvement of voluntary hedging activities information disclosure among Malaysian companies as to enhance the quality information.…”

Section: Resultsmentioning

confidence: 99%

Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

Abdullah¹,

Ismail²

2018

Preprint

Self Cite

View full text Add to dashboard Cite

This study examines the extent of information about hedging activities disclosures within the annual reports of Main Market companies listed on Bursa Malaysia. The extent of hedging activities disclosures is captured through a 32-item-template, which consists of a mandatory and voluntary disclosure scores. The results of this study indicate that the extent of information on hedging activities disclosure is still insufficient among the sampled companies even though the disclosure scored is quite high. This study also examines the relationship between the existence of risk management committee (RMC), its characteristics and the extent of information on hedging activities disclosure in two separate statistical models. The regression results imply that the existence of RMC is positive but does not significantly influence the extent of information on hedging activities disclosure. However its characteristics (i.e. RMC independence and RMC meeting) have a significant influence. The findings may provide some meaningful insights to regulators, policymakers and researchers, towards the establishment of RMC as a part of the internal corporate governance mechanisms. In addition to its existence, the effectiveness of RMC also needs to be emphasised.

show abstract

Section: Resultsmentioning

confidence: 99%

Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

Abdullah¹,

Ismail²

2018

Preprint

Self Cite

View full text Add to dashboard Cite

show abstract

“…They discovered that knowledge of the market and training on how to execute derivatives instruments seemed to be the problem contributing to the low usage of derivatives in Peru. Subsequently, Ameer et al (2011) analysed the public listed companies in Malaysia on the usage of derivatives and concluded that a lack of expertise was detrimental to the utilisation of derivatives.…”

Section: Foreign Exchange Risk Hedgingmentioning

confidence: 99%

Determinants of corporate foreign exchange risk hedging

2014

View full text Add to dashboard Cite

Purpose – The purpose of this study is to delineate the factors influencing the use of financial derivatives by non-financial firms in managing their exchange rate exposure. In total, 219 non-financial firms are surveyed in regard to their financial hedging decision. Design/methodology/approach – This study is conducted via a survey and the questionnaires were sent to the treasurers and financial controller of the firms. Descriptive analysis is employed to assess the profiles of the respondents. Then, factor analysis is carried out to determine the factors influencing the use of financial derivatives in Malaysia. Findings – The results indicate that the hedging decision of non-financial firms is influenced by their assertive level toward the market and regulators and also how flexible they are for derivative instruments. The intellectual capability that firms acquire to perform hedging strategies is also vital in influencing them to make hedging decision. Practical implications – The insights of this survey would assist and prepare firms to hedge their exchange rate risk by employing financial derivatives. Knowing the influences of firms' adoption of currency derivatives would allow policy makers to formulate their policies in boosting the liquidity of Malaysian derivative market. Originality/value – This study presents findings on the factors influencing the execution of financial hedging by non-financial firms in Malaysia. Survey data are used to seek for the feedback from the market players in order to provide empirical evidence on the corporate use of financial hedging.

show abstract

“…Although previous studies reported that companies were not violating the accounting standards' requirements (e.g. Ameer et al, 2011;Hassan et al, 2012;Abdullah and Chen, 2010;Adznan and Puat Nelson, 2014), the strict requirements that needed to be fulfilled by the companies before they can apply hedge accounting seem to discourage them from applying hedge accounting reporting practices. As a result, this can weaken the quality of the derivatives information.…”

Section: Resultsmentioning

confidence: 97%

“…Due to this reason, several studies were conducted to explain the reason behind the decision why some companies decided not to apply hedge accounting. For example, Ameer et al (2011) explained that the lack of expertise and the cost weigh more over the benefits of using derivatives were the reasons why companies avoided complying with hedge accounting requirements.…”

mentioning

confidence: 99%

Company-specific characteristics and the choice of hedge accounting for derivatives reporting: Malaysian case

Abdullah

Ismail

2017

IJAAPE

View full text Add to dashboard Cite

This paper investigates the adoption of hedge accounting by Malaysian listed companies in reporting their use of derivatives for hedging activities. Based on a sample of 300 Malaysian listed companies, we found that only 162 companies (54 percent) used derivatives to hedge their financial risks exposure and only 30 percent of the companies chose to apply hedge accounting. In addition, this study examines the relationship between the company specific characteristics and their application of hedge accounting. The logistic regression results showed that the decision to apply hedge accounting by Malaysian companies is positively influenced by the company size and leverage. The implications of the findings were discussed.

show abstract

A Survey on the Usage of Derivatives and Their Effect on Cost of Equity Capital

Cited by 9 publications

References 48 publications

Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

Hedging Activities Information and Risk Management Committee Effectiveness: Malaysian evidence

Determinants of corporate foreign exchange risk hedging

Company-specific characteristics and the choice of hedge accounting for derivatives reporting: Malaysian case

Contact Info

Product

Resources

About