Financial Derivatives Usage and Firm Value in Turbulent Periods: Comparative Evidence from India during the COVID-19 Crisis

IF 2.5 Q2 ECONOMICS
S. M. R. K. Samarakoon, Rudra P. Pradhan, I. K. D. Gunathunga, Sasikanta Tripathy
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引用次数: 0

Abstract

This study delves into the ramifications of financial derivatives usage on the firm value among Indian non-financial firms, covering both the COVID-19 crisis period (2020–2021) and the preceding stable phase (2015–2019). This comparative analysis aims to discern how the strategic use of derivatives influences firm valuation across varying economic conditions. Analyzing 712 firm-year observations during the pandemic and extending to 1735 observations in the pre-COVID era, our findings reveal that while foreign exchange and interest rate derivatives consistently enhance firm value, the use of commodity derivatives exhibits a complex relationship with firm value, becoming notably negative during the pandemic. This suggests that derivatives’ effectiveness in risk management and value preservation is contingent upon both the type of derivative and the economic context. Our research underscores the critical role of derivatives in navigating financial uncertainties, offering nuanced insights that enrich our understanding of firm-level risk management strategies in both stable and turbulent times.

动荡时期的金融衍生品使用和公司价值:印度在 COVID-19 危机期间的比较证据
本研究深入探讨了金融衍生品的使用对印度非金融企业公司价值的影响,涵盖 COVID-19 危机时期(2020-2021 年)和之前的稳定阶段(2015-2019 年)。这项比较分析旨在揭示衍生工具的战略性使用如何在不同经济条件下影响公司估值。我们分析了大流行病期间的 712 个公司年度观测值,并延伸到前 COVID 时代的 1735 个观测值,结果发现,虽然外汇和利率衍生品始终能提升公司价值,但商品衍生品的使用与公司价值之间的关系却很复杂,在大流行病期间,商品衍生品的使用明显变为负值。这表明,衍生工具在风险管理和价值保全方面的有效性取决于衍生工具的类型和经济环境。我们的研究强调了衍生品在驾驭金融不确定性方面的关键作用,提供了细致入微的见解,丰富了我们对稳定时期和动荡时期公司层面风险管理策略的理解。
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来源期刊
CiteScore
3.00
自引率
0.00%
发文量
34
期刊介绍: The current remarkable growth in the Asia-Pacific financial markets is certain to continue. These markets are expected to play a further important role in the world capital markets for investment and risk management. In accordance with this development, Asia-Pacific Financial Markets (formerly Financial Engineering and the Japanese Markets), the official journal of the Japanese Association of Financial Econometrics and Engineering (JAFEE), is expected to provide an international forum for researchers and practitioners in academia, industry, and government, who engage in empirical and/or theoretical research into the financial markets. We invite submission of quality papers on all aspects of finance and financial engineering. Here we interpret the term ''financial engineering'' broadly enough to cover such topics as financial time series, portfolio analysis, global asset allocation, trading strategy for investment, optimization methods, macro monetary economic analysis and pricing models for various financial assets including derivatives We stress that purely theoretical papers, as well as empirical studies that use Asia-Pacific market data, are welcome. Officially cited as: Asia-Pac Financ Markets
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