The use of derivatives to hedge risk for plantation and property companies in Malaysia / Mohamad Azwan Md Isa, Norashikin Ismail, and Nor Hadaliza Abd Rahman

Md Isa, Mohamad Azwan and Ismail, Norashikin and Abd Rahman, Nor Hadaliza (2017) The use of derivatives to hedge risk for plantation and property companies in Malaysia / Mohamad Azwan Md Isa, Norashikin Ismail, and Nor Hadaliza Abd Rahman. e-Academia Journal, 6 (1). pp. 38-47. ISSN 2289-6589

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Official URL: http://journale-academiauitmt.uitm.edu.my/v2/index...

Abstract

Global financial crisis during 2007-2009 had hit corporate sectors significantly. The corporations’ liquidity and profitability were affected so badly during the crisis that forced them to come up with hedging strategy to mitigate the risk. Hence, this study attempts to investigate the determinants corporations’ specific factors on the derivatives use among 71 Malaysian firms in the plantation and property sectors in hedging the risks. The study is divided into two sub-periods i.e. during financial crisis (2007-2009) and post financial crisis (2010-2012) using the public listed corporations at Bursa Malaysia and employing the Logistic Regression model. The findings revealed that growth opportunity of the corporations has significant impact on the derivatives use during the financial crisis whilst profitability and growth opportunity both contributed to the derivatives use post financial crisis. It is comfortably to say that the corporations with better growth and profitability tend to use the derivatives in hedging their risks. This is consistent with the risk management theory in order to mitigate under investment problem. Most importantly, this study indicates that the Malaysian firms in the two sectors are still risk averse as the derivatives use in hedging corporate risks is still at minimal level.

Item Type: Article
Creators:
CreatorsEmail
Md Isa, Mohamad Azwanmoham821@johor.uitm.edu.my
Ismail, NorashikinUNSPECIFIED
Abd Rahman, Nor HadalizaUNSPECIFIED
Subjects: H Social Sciences > HD Industries. Land use. Labor > Agriculture > Agricultural economics > Large farms. Plantations > Malaysia
H Social Sciences > HD Industries. Land use. Labor > Risk management. Risk in industry. Operational risk > Malaysia
Divisions: Universiti Teknologi MARA, Terengganu > Dungun Campus > Universiti Teknologi MARA (Terengganu) Press (UPENA)
Journal or Publication Title: e-Academia Journal
ISSN: 2289-6589
Volume: 6
Number: 1
Page Range: pp. 38-47
Official URL: http://journale-academiauitmt.uitm.edu.my/v2/index...
Item ID: 21347
Uncontrolled Keywords: financial crisis; hedging; derivatives; corporate risk; logistic regression
Last Modified: 19 Sep 2018 10:17
Depositing User: Perpustakaan Cendekiawan UiTM Caw Terengganu
URI: http://ir.uitm.edu.my/id/eprint/21347

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