The Impact of Financial Derivatives on the Enterprise Value of Chinese Listed Companies: Moderating Effects of Managerial Characteristics

Corporate managers are the central figures of corporate activity who can control the strategic direction of companies. The company’s use of financial derivatives can avoid risks and has an important impact on the value of the company. This study examines A-share listed firms in Shanghai over the per...

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Bibliographic Details
Published in:International journal of financial studies 2022-12, Vol.11 (1), p.2
Main Authors: Yang, Ao, Li, Wenqi, Teo, Brian Sheng Xian, Othman, Jaizah
Format: Article
Language:English
Subjects:
Bankruptcy
Capital markets
Commodities
Coronaviruses
Costs
COVID-19
Debt financing
Decision making
Derivatives
Economic crisis
Economic growth
enterprise value
Executive compensation
financial derivatives
Financial instruments
Foreign exchange rates
Hedging
Hypotheses
Interest rates
International finance
Investments
manager characteristics
Managers
Present value
Risk management
Tax rates
Tax refunds
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Summary:Corporate managers are the central figures of corporate activity who can control the strategic direction of companies. The company’s use of financial derivatives can avoid risks and has an important impact on the value of the company. This study examines A-share listed firms in Shanghai over the period 2011–2020, uses an OLS panel and a moderating effects model, and investigates the impact of financial derivatives on firm value from the perspective of managers’ characteristics. We find that financial derivatives can significantly increase the enterprise value of Chinese listed companies, while exchange rate derivatives have a stronger impact on enterprise value. We also find that the higher the proportion of managers who hold shares and have a financial background, the better the effect of firms using financial derivatives. These research results are of great significance to the application of financial derivatives and provide companies with risk management decisions after COVID-19.
ISSN:2227-7072
2227-7072
DOI:10.3390/ijfs11010002