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Derivative financial instrument use in Australia

Author

Listed:
  • Henk Berkman
  • Michael E. Bradbury
  • Phil Hancock
  • Clare Innes

Abstract

This paper examines the relation between derivatives use and financial characteristics of Australian industrial and mining firms. The firm characteristics proxy for financial distress, tax losses, managerial ownership, growth opportunities, the ability to generate operating cash flows and liquidity. We also control for firm size, dividends and exposure to foreign exchange risk. The results show that firm size and leverage are the main explanatory variables for derivative use for both industrial and mining firms

Suggested Citation

  • Henk Berkman & Michael E. Bradbury & Phil Hancock & Clare Innes, 2002. "Derivative financial instrument use in Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 42(2), pages 97-109, June.
    • Handle: RePEc:bla:acctfi:v:42:y:2002:i:2:p:97-109
    DOI: 10.1111/1467-629X.00069
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    Cited by:

    1. Nevi Danila & Chia-Hsing Huang, 2016. "The determinants of exchange rate risk management in developing countries: evidence from Indonesia," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 6(1), pages 53-67.
    2. Chris Becker & Daniel Fabbro, 2006. "Limiting Foreign Exchange Exposure through Hedging: The Australian Experience," RBA Research Discussion Papers rdp2006-09, Reserve Bank of Australia.
    3. Tadanori Yosano & I Wayan Nuka Lantara, 2010. "Bank-firm relationship and the use of derivatives in japan," Discussion Papers 2010-58, Kobe University, Graduate School of Business Administration.
    4. Ahmad Ahmadpour Kasgari & Seyyed Hasan Salehnezhad & Fatemeh Ebadi, 2013. "A Review of Bankruptcy and its Prediction," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 274-277, October.
    5. Doan Van Dinh & Guangming Gong, 2013. "How are Derivative Accounting Applied for Hedging Activities?," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 72-90, October.
    6. Yip, Wing Hung & Nguyen, Hoa, 2012. "Exchange rate exposure and the use of foreign currency derivatives in the Australian resources sector," Journal of Multinational Financial Management, Elsevier, vol. 22(4), pages 151-167.
    7. Tim Brailsford & Richard Heaney & Barry Oliver, 2005. "Use of derivatives in public sector organizations," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 45(1), pages 43-66, March.
    8. Phan, Dinh & Nguyen, Hoa & Faff, Robert, 2014. "Uncovering the asymmetric linkage between financial derivatives and firm value — The case of oil and gas exploration and production companies," Energy Economics, Elsevier, vol. 45(C), pages 340-352.
    9. Hassan Tanha & Michael Dempsey & Mena Labeb, 2018. "Derivatives Usage by Australian Industrial Firms: Pre-, during and post-GFC," Review of Economics & Finance, Better Advances Press, Canada, vol. 11, pages 31-39, February.
    10. Taylor, Grantley & Tower, Greg & Van Der Zahn, Mitch, 2011. "The influence of international taxation structures on corporate financial disclosure patterns," Accounting forum, Elsevier, vol. 35(1), pages 32-46.
    11. Christine Brown & James Ma, 2011. "The collapse of Pasminco: misjudgment, misfortune and miscalculation," Australian Journal of Management, Australian School of Business, vol. 36(2), pages 287-312, August.
    12. Abhimanyu Sahoo & Seshadev Sahoo, 2020. "What Drives Derivatives: An Indian Perspective," JRFM, MDPI, vol. 13(6), pages 1-19, June.
    13. Bartram, Söhnke M., 2004. "The Use of Options in Corporate Risk Management," MPRA Paper 6663, University Library of Munich, Germany.
    14. Franziska Wolf & Terry Boulter & Sukanto Bhattacharya, 2017. "Derivative Practices in Australian and Canadian Industries," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 20(04), pages 1-39, December.
    15. Jacqueline Birt & Michaela Rankin & Chen L. Song, 2013. "Derivatives use and financial instrument disclosure in the extractives industry," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(1), pages 55-83, March.
    16. Heaney, Richard & Winata, Henry, 2005. "Use of derivatives by Australian companies," Pacific-Basin Finance Journal, Elsevier, vol. 13(4), pages 411-430, September.
    17. Doan Van Dinh & Guangming Gong, 2013. "Applied Financial Mathematical Model for Derivative Instruments and Hedging Exchange Rate," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 254-273, October.
    18. Grantley Taylor & Greg Tower & John Neilson, 2010. "Corporate communication of financial risk," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(2), pages 417-446, June.
    19. Arnold, Matthias M. & Rathgeber, Andreas W. & Stöckl, Stefan, 2014. "Determinants of corporate hedging: A (statistical) meta-analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(4), pages 443-458.

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