THE IMPACT OF DERIVATIVES HEDGING ON FIRM VALUE "THE SINGAPORE CASE STUDY"

Abstract

The number of firms using derivatives to hedge their risks has been increasing from the 1970s until now. Although numerous empirical analyses examined the impact of using derivatives on the company’s value, there is still no final conclusion in the literature about this influence. This thesis examines the impact of using commodity derivatives, interest rate derivatives, and currency derivative on the firm’s value of non-financial companies in Singapore over the period 2013-2016. For doing so, we use linear regression and panel data techniques following the study made by Khediri in 2008. The data is collected from the website of the Singapore Exchange Market (SGX) and from the annual reports of each company. The result indicates that there is no strong relationship between using derivatives and the firm’s value.