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Risk management and value creation: new evidence for Brazilian non-financial companies

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Listed:
  • Rogiene Batista dos Santos
  • Fabiano Guasti Lima
  • Rafael Confetti Gatsios
  • Rodrigo Borges de Almeida

Abstract

The practice of financial risk management with derivatives has received attention both from the academia and the market. In Brazil, there is a growing use of these instruments by companies, in line with the growth of such market in the global economy. This article aims to investigate the relationship between the financial risk management and the value creation to the shareholder for non-financial Brazilian companies. The sample was made up of 1794 firm-year observations from 2006 to 2014. Results obtained via panel data, including the GMM, point out that companies which used derivatives did not add value during the period analysed. An explanation for this result is that most of the companies use derivatives in order to manage the cash flow and not to add value.

Suggested Citation

  • Rogiene Batista dos Santos & Fabiano Guasti Lima & Rafael Confetti Gatsios & Rodrigo Borges de Almeida, 2017. "Risk management and value creation: new evidence for Brazilian non-financial companies," Applied Economics, Taylor & Francis Journals, vol. 49(58), pages 5815-5827, December.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:58:p:5815-5827
    DOI: 10.1080/00036846.2017.1343451
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    References listed on IDEAS

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    Cited by:

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    2. Jyoti Prakash Das & Shailendra Kumar, 2023. "Impact of corporate hedging practices on firm's value: An empirical evidence from Indian MNCs," Risk Management, Palgrave Macmillan, vol. 25(2), pages 1-35, June.
    3. Jerome Geyer-Klingeberg & Markus Hang & Andreas Rathgeber, 2021. "Corporate financial hedging and firm value: a meta-analysis," The European Journal of Finance, Taylor & Francis Journals, vol. 27(6), pages 461-485, April.
    4. Bessler, Wolfgang & Conlon, Thomas & Huan, Xing, 2019. "Does corporate hedging enhance shareholder value? A meta-analysis," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 222-232.
    5. Sticca, Ralph Melles & Nakao, Silvio Hiroshi, 2019. "Hedge accounting choice as exchange loss avoidance under financial crisis: Evidence from Brazil," Emerging Markets Review, Elsevier, vol. 41(C).

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