KEBIJAKAN HEDGING DENGAN DERIVATIF VALUTA ASING PADA PERUSAHAAN PUBLIK DI INDONESIA

Abstract

The purpose of this paper is investigates the corporate hedging policy among Indonesian
capital market to provide empirical evidence on the determinants of the hedging policy.
The research using a sample of 150 non-financial manufacturing firms over the period
2010. The methodology taken is application of logit regression framework and panel
data technique. It is found that a few Indonesia firms hedge market risks. There is a
significant positive correlation between financial distress costs, underinvestment costs,
and assets substitution costs towards corporate hedging policy. Hence, it seems that
Indonesian firms do not assign hedging to respond to tax benefit. At present, most of the
Indonesian firms are either cautions or unsure about the use of derivative instruments.
There is a need to inform managers about usefulness of the derivatives and market risk
reporting that would contribute to greater financial transparency. The findings imply that
firms should disclose in their publicy financial report that they truly use derivatives for
hedging purposes. This paper adds contribution to risk management research by
providing strong empirical evidence of corporate hedging policy in Indonesia as one of
the emerging market countries.