Investigating The Simultaneity of Corporate Hedging and Debt Policies : Empirical Evidence From Indonesia  

Oleh:

Suriawinata, Iman S.

Jenis: Article from Journal - ilmiah nasional - tidak terakreditasi DIKTI
Dalam koleksi: International Journal of Business vol. 7 no. 2 (May 2005), page 179-204.
Topik: CORPORATE; currency derivatives; corporate hedging policy; debt policy

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: II51.4 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

Lihat Detail Induk

Isi artikel

The primary objective of this paper is to investigate the simultaneity of corporate hedging and debt policies. Using a pooled sample of indonesian non - financial listed firms covering the perios of 1996 - 2001, the present study finds evidence that corporate hedging and debt policies are simultaneoysly determined. That is, the use of debts motivate firms to hedge, but simultaneously, hedging increases debt capacity and induces firms to borrow more in order to take advantage of the tax benefits arising from additional debt capacity. Another important finding is that fianncially distressed firms as indicated by their debt restructuring programs are less motivated to hedge, because such firms wills ee that the option values of their equity will increase as their cash - flow volatilities increase. Therefore, financially distressed firms tend not to hedge, or at least, hedge lesser comapred to those of firms that do not experience financial distress.

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