A study on the relationship between SIZE, TIE DER, DR, MKT, CR, DPR, TAX, OWNERSHIP and NATURE with the national amount of derivatives used by the companies that are listed in the main board of Bursa Malaysia stock exchange / Noor Aainaa Shahirah Muhamad

There a lot of research done on the relationship between financial ratios such as the market to book value ratio (MKT), price to earnings ratio (PE), times interest earned (TIE), dividend pay-out ratio (DPR), current ratio (CR), debt to equity ratio (DER) and debt ratio (DR) with the extent of firms' derivatives usage. Besides that, there were also other measures such as the firms' size (SIZE), tax loss carry forward (TAX), ownership structure (OWNERSHIP) and nature of operation (NATURE). The extent firms using derivatives was measured by the notional Ringgit Malaysia (RM) amount of derivatives position which can be defined as the sum of contract values (forward, swap and option contracts) outstanding at a balance date. These researches were done in order to determine the impact of those ratios and the other measures as mentioned above to the extent of firms using derivatives. Almost all of the studies were conducted in the overseas especially in New Zealand. So, this study is conducted in order to see whether in Malaysia situation, the same results are obtained or not. As a result, out of eleven independent variables those are representing various proxies of firms' performance; eight of them which are the SIZE, TIE, MKT, DR, CR, PE, TAX and OWNERSHIP are parallel with the previous studies. While, three of them which are DER, NATURE and DPR are contrary to the prior studies. In other words, most of the variables used in this study have signs that are consistent with theory but are not statistically significant. The suitable reason that apply to defend this situation is that because there may be differences in Malaysia financial practices with the overseas' and because there are data constraints, so that the results are not very powerful.