Open AccessCorporate Derivatives and Risk Management: A Moderated Mediation Test
Author(s) -
Atia Alam,
AUTHOR_ID,
Talat Afza,
AUTHOR_ID
Publication year - 2021
Publication title -
pakistan journal of social research
Language(s) - English
Resource type - Journals
eISSN - 2710-3137
pISSN - 2710-3129
DOI - 10.52567/pjsr.v3i4.133
Subject(s) - derivative (finance) , mediation , enterprise value , business , currency , value (mathematics) , moderated mediation , sample (material) , test (biology) , risk management , foreign exchange risk , accounting , monetary economics , economics , finance , psychology , statistics , social psychology , paleontology , chemistry , mathematics , chromatography , political science , law , biology
The present study contributes to existing literature by empirically testing the moderated mediating role of firm’s risk on the relationship between derivative usage and firm value by gathering sample data of Pakistani and Malaysian non-financial firms. By using Bootstrap technique of Hayes (2015), study finds that the use of derivative has both direct and indirect effect on firm value in Pakistan, contrary to Malaysia, as derivative usage significantly enhances firm value by reducing firm’s risk. Findings remain same for both foreign currency and interest rate derivative usage that firm’s risk significantly mediates the relationship between derivative usage and firm value in Pakistani non-financial corporations. Keywords: Derivative Usage, Firm Value, Firm's Risk, Moderated Mediation, Pakistan, Malaysia