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Financial derivatives, their use and impact on firm performance and value

Author

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  • Robert Vitík

Abstract

This paper wants to give a basic overview of arguments for and against of using the financial derivatives tools in the field of foreign exchange risk management. The case study shows, how the separate hedging instruments have impact on P & L statement. This paper discusses different relationship between the shareholders and management, in the matter of risk management, profit volatility restriction and finally performance measurement of management staff. This essay is focused on question whether hedging transactions influence firm value - stock price. At the conclusion, we discuss a research paper of S & P agency, concerning of relationship between applications of the financial derivatives and rating of companies operating in oil and gas sector.

Suggested Citation

  • Robert Vitík, 2008. "Financial derivatives, their use and impact on firm performance and value," Ekonomika a Management, Prague University of Economics and Business, vol. 2008(2).
    • Handle: RePEc:prg:jnleam:v:2008:y:2008:i:2:id:29
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    More about this item

    Keywords

    Finanční deriváty; Hodnota firmy; Výkonnost podniku; Forwardy; Řízení rizik; Financial derivatives; Rating; Firm performance; Opce; Firm value;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G1 - Financial Economics - - General Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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