The Impacts of Uses of Derivatives on the Value and Risk of Listing Cpmpanies

• Main Authors: Bruce Lin, 林東賢
• Other Authors: 許溪南
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/55673278086097757939

碩士 === 逢甲大學 === 金融碩士在職專班 === 101 === There have been a lot of variations at the domestic financial market in recent years, especially for the derivatives. Since the inception of foreign futures trading in 1994, the Central Bank and the Finance Department of Taiwan have approved the domestic banks to trade the derivatives such as options, forward interest agreement, cross currency swap, etc. The domestic futures market has also been introduced in 1998. At present, the domestic derivatives markets are getting more active because of adoption of the system of floating exchange rate since 1973. Since then, some enterprises recognized unexpected gains or losses due to the change in exchange rates and noticed the existence of foreign exchange risk. Additionally, there are some other risks originated from interest rates or commodity prices. These factors make the enterprises to take measures to hedge the related risks. On the other hand, the profits of the traditional banking operations have been decreased due to the smaller gaps of interest rate, leading the banks to boost the business of derivatives to increase the fee income of lower risks. That is the main background for the banks to develop the derivatives significantly. Derivatives are suitable tools for the management of assets and liabilities and risks. In addition, they have the functions of hedge, arbitrage and speculation. However, if they are not operated properly, the high level of leverage will lead to critical damage for the enterprises. The banks will also suffer seriously because of the default risks generated by the customers. For this background, this study intends to examine the performance of enterprises in Taiwan using the derivatives, such as forward contracts, currency options, interest swaps, cross currency swaps and dual currency investment for those popular operated products. What are the related risks? Whether the variations of risks are significant between users and non-users? The sample period of this study is from 2010 to 2012 and the sample contains three industries, such as Electric appliances and wires, Ocean and land transportation, and Iron steels. The results indicate that there doesn’t exist a direct connection on the firm’s value between users and non-users；it will increase the risks for the users；and the difference of risk is separately significant between users and non-users. The result that the use of derivatives will increase the risks of users, which is different from the previous literature. This different result may due to the samples of this study which contains fewer samples and shorter sample period. This will be worthy further examination in the future.