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Xu, Tianzi (2020) The Determinants of Corporate Hedging with Derivatives for Non-financial Firms in the United Kingdom. [Dissertation (University of Nottingham only)]

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Abstract

In recent decades, corporate hedging with derivatives has become popular among firms in different industries, and extensive researches attempt to determine the driving factors for firms hedging with derivatives.

In this paper, an investigation about the determinants of non-financial firms using derivatives for hedging in the United Kingdom market has been conducted. On the basis of previous research, six potential determinants of corporate hedging with derivatives are demonstrated, which are financial distress, economics of scale, growth opportunities, alternatives for hedging, foreign exchange exposure, and tax incentives. The sample consists of 258 UK non-financial firms from different industries. In addition, the hedging data and financial data are collected from the annual report and Bloomberg respectively, from fiscal years 2017 to the fiscal year 2019.

A combination of several tests is conducted to examine the impact of six determinants, which incorporate mean difference test, univariate logistic regression, Pairwise correlation test, multivariate logistic regression, and robustness check.

It is suggested by the empirical results that profitability and liquidity are significantly negatively correlated with corporate hedging. In addition, firm size demonstrates a significantly positive relationship with corporate hedging. Further research on the determinants of corporate hedging should focus on growth opportunities and tax incentives.

Item Type:	Dissertation (University of Nottingham only)
Depositing User:	XU, Tianzi
Date Deposited:	14 Dec 2022 09:17
Last Modified:	14 Dec 2022 09:17
URI:	https://eprints.nottingham.ac.uk/id/eprint/61721

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