Omar, Abdullah and Taufil Mohd, Kamarun Nisham and Ahmad, Norzalina (2017) Determinants of hedging: a review of theoretical studies. Journal of Insurance and Financial Management, 2 (5). pp. 92-101. ISSN 2371-2112

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Abstract

Hedging instruments are deemed as value enhancing tool for both financial and non financial firms. The aim of this study is to highlight those theoretical studies which are written in context of hedging determinants. Theoretical studies argued that in a world with no taxes, no transaction costs, and with fixed investment policies, hedging with derivatives is irrelevant to firm value. However, some studies suggests that derivative instruments can increase firm value when the premises of a perfect market have been relaxed, since they can eliminate corporate tax liabilities, financial distress costs, dependence on costly external financing, and agency costs.

Item Type:	Article
Uncontrolled Keywords:	Derivatives, Hedging, Financial Risk
Subjects:	H Social Sciences > HG Finance
Divisions:	School of Economics, Finance & Banking
Depositing User:	Mrs. Norazmilah Yaakub
Date Deposited:	25 Jul 2019 02:57
Last Modified:	25 Jul 2019 02:57
URI:	https://repo.uum.edu.my/id/eprint/26253

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