EFFECT OF USING DERIVATIVES ON RISK MANAGEMENT, FINANCIAL PERFORMANCE AND FIRM VALUE

Authors : Esra Aydın, Cihan Tanrıöven

Pages : 86-107

Doi:10.17130/ijmeb.1366745

View : 92 | Download : 179

Publication Date : 2024-03-25

Article Type : Research

Abstract :This study investigates the impact of derivatives on risk management, financial performance, and firm value in non-financial firms from 2016-2021, spanning pre-pandemic and pandemic periods. It first examines firms\' derivatives usage intensity through annual reports, then assesses the direct effects using panel data analysis. According to derivatives usage intensity observations, it is seen that the approach of firms to use derivatives hasn\'t changed based on the pandemic. Approximately %30 of firms stated that they use derivatives in risk management while other firms stated they use in-house methods in risk management. Moreover, according to the results of the panel data analysis, this study, which is based on limited data and examines the impact of the pandemic period, finds that the use of derivative instruments increases risk and negatively affects financial performance. On the other hand, any relationship between derivatives usage and firm value hasn\'t been found to be statistically significant. These results suggest that derivatives are not an effective risk management tool for the sector, prompting firms to reconsider their risk management strategies and explore why derivatives fail to mitigate risk effectively.
Keywords : Türev Araçlar, Risk Yönetimi, Finansal Performans, Firma Değeri