WAHYUDI, Sugeng (2019) The Determinants of Corporate Hedging Policy: A Case Study from Indonesia. International Journal of Economics and Business Administration, VII (1).

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Abstract

Looking at general, the company will hedge when the amount of foreign debt rises along with
fluctuations in foreign exchange rates.

However, this is not the case with the non-financial sector companies in Indonesia Stock
Exchange, which shows a decrease in the use of derivative instruments compared to financial
sector companies during the period 2014-2016.

Τhe study aims to analyze the effect of internal factors on hedging policies through the use of
derivative instruments in nonfinancial companies in the period 2014-2016, by putting the
firm size as a control variable. The logistic regression analysis is used to test the antecedents
of the hedging policy from the selected sample.

The result shows that the liquidity and cash flow volatility have a significant positive effect
on the use of derivative instruments. Meanwhile, dividend payout ratio, managerial
ownership, leverage and the growth opportunity have no significant effect on hedging policy.

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