Do companies that use derivatives for hedging reduce their risks?
DOI:
https://doi.org/10.5007/2175-8069.2020v17n45p100Abstract
The purpose of this study is to evaluate the impact of using derivatives to hedge risks by companies with shares listed on the São Paulo Securities Exchange ([B]3). Employing a sample of 359 firms analyzed between 2010 and 2017, separated between users and non-users of derivatives by means of a dummy variable, panel regression was applied, with a risk measure acting as the dependent variable and size, leverage, book-to-market ratio, liquidity and use or not of derivatives serving as the independent variables. The results obtained by the models were submitted to robustness tests and indicated, as expected, that the use of derivatives for hedging was associated with a reduction of the risk of price variations in the period studied, as has been verified in developed countries. This study can shed light on the use of derivatives before the advent of IFRS 9 on January 1, 2018, regulating the classification and disclosure of derivative financial instruments. Besides this, the study can help managers perceive the impact of adopting hedging policies in the stock market.
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