The determinants of derivative usage: a study on Malaysian non-financial firms

The objective of the study was to examine the determinants of derivative usage in Malaysian non-financial firms during a three year period from 2011 to 2013, and the data has been taken yearly. The sample data were derived from five variables such as debt, investment growth, managerial ownership, liquidity and profitability. The dependent variable is derivative usage and was indicated by using contract or notional amount used by the firms. Debt has been indicated by using two proxies which is leverage (LVG) and debt-to-equity ratio (DER) , investment growth was using capital expenditure ratio (CAPX) and dividend payout ratio (DPR) as proxy, managerial ownership was using number of shareholding (NOS), liquidity was indicated by using current ratio (CR) and quick ratio (QR) as its proxy and profitability was using return on asset (ROA) and return on equity (ROE) as proxy and these were the independent variables. The methods that will be used were multiple regressions and e-views. Based on the four conditional theories, the result showed that debt, investment growth, managerial ownership and liquidity has significant relationship with derivative usage.