Analysis of Factors Affecting Hedging Decision using Derivative Instruments/Futures Contracts in Manufacturing Companies Listed on the Indonesia Stock Exchange for the Period 2016-2022
1Ririn Nafisa Ulfa,2 Mahatma Kufepaksi,3Ernie Hendrawaty
1,2,3Faculty of Economics and Business, University of Lampung, Indonesia
https://doi.org/10.47191/jefms/v7-i6-38ABSTRACT:
The objective of this investigation is to assess the impact of leverage, liquidity, financial distress, growth opportunities, and firm size on hedging determinations utilizing derivative instruments/futures contracts among manufacturing firms listed on the Indonesian Stock Exchange from 2016 to 2022. The study encompasses the entire population of manufacturing companies listed on the Indonesian Stock Exchange during the aforementioned period, totaling 138 entities. A purposive sampling method was employed to select a sample of 123 companies. Secondary data was utilized for analysis, employing logistic regression as the analytical technique. The results indicate that leverage, liquidity, and financial distress exhibit adverse effects on hedging decisions, while firm size exerts a positive influence on such determinations. Moreover, the study finds no significant impact of growth opportunities on hedging decisions.
KEYWORDS:
Leverage, Liquidity, Financial distress, Growth opportunity, Firm size, Hedging
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