Role of Hedging Mechanism in Maintaining Volatility Cash Flow and Growth Opportunity and Their Impact on Investor Reaction
Abstract
This study aims to investigate the role of forward contract hedging in maintaining volatility cash flow and growth opportunity and its impact on investor reaction. The population in this study included 242 non-financial companies listed on the Indonesia Stock Exchange from 2013–2017. The sample was determined using purposive sampling, and path analysis was employed to analyze the data. Results show that forward contract hedging mediates the effects of volatility cash flow and growth opportunity on investor reaction. This research is expected to provide insights so that company management can improve performance properly and increase investor confidence through the application of hedging, thereby maintaining volatility cash flow and growth opportunity.
Keywords: Cash flow volatility, growth opportunity, hedging forward contract, investor reaction.
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References
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Ng, S., & Daromes, F. E. (2016). Peran Kemampuan Manajerial Sebagai Mekanisme Peningkatan Kualitas Laba Dan Nilai Perusahaan. Jurnal Akuntansi Dan Keuangan Indonesia, 13(2), 174–193. https://doi.org/10.21002/jaki.2016.10
Nugraha, M. C. (2017). Peran Volatility Cash Flow Dan Kesempatan Bertumbuh Perusahaan Dalam Menekan Financial Distress Dengan Peningkatan Penggunaan Hedging Forward Contract. Universitas Atma Jaya Makassar.
Paminto, A., Setyadi, D., & Sinaga, J. (2016). The Effect of Capital Structure , Firm Growth and Dividend Policy on Profitability and Firm Value of the Oil Palm Plantation Companies in Indonesia. European Journal of Business and Management, 8(33), 123–134.
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Repie, R. R., & Sedana, I. B. P. (2015). Kebijakan Hedging Dengan Instrumen Derivatif Dalam Kaitan Dengan Underinvestment Problem Di Indonesia. E-Jurnal Manajemen Unud, 384–398.
Scott, W. R. (2015). Financial accounting theory. Prentice Hall Canada (Seventh Ed). Totonto: Pearson.
Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355. https://doi.org/10.2307/1882010
Tumirin. (2005). Analisis variabel akuntansi kuartalan, variabel pasar, dan arus kas operasi yang mempegaruhi bid-ask spread. Jurnal Akuntansi & Audit Indonesia, 9(1), 61–75.
Vaughan, E. J., & Vaughan, T. M. (2014). Fundamentals of Risk and Insurance. The Journal of Risk and Insurance (Elevent Edition). United States of America: Wiley.
Altuntas, M., Liebenberg, A. P., Watson, E. D., & Yildiz, S. (2017). Hedging, Cash Flows, and Firm Value: Evidence of an Indirect Effect. Journal of Insurance Issues, 40(1), 1–22.
Ameer, R. (2010). Determinants Of Corporate Hedging Practices In Malaysia. International Business Research, 3(2), 120–130. https://doi.org/10.5539/ibr.v3n2p120
Aslikan, I., & Rokhmi, S. (2017). Faktor-Faktor Yang Mempengaruhi Keputusan Hedging Pada Perusahaan Manufaktur. Jurnal Ilmu Dan Riset Manajemen, 6(5), 1–21.
Brigham, E. F., & Houston, J. F. (2017). Fundamentals of financial management (p. 631). United States of America: Cengage Learning.
Chaudhry, N. I., Mehmood, M. S., & Mehmood, A. (2014). Determinants of corporate hedging policies and derivatives usage in risk management practices of non-financial firms. Munich Personal RePEc Archive, (57562), 1–18.
Che, X., Liebenberg, A. P., Liebenberg, I. A., & Morris, B. C. L. (2018). The effect of growth opportunities on the market reaction to dividend cuts: evidence from the 2008 financial crisis. Review of Quantitative Finance and Accounting, 51(1), 1–17. https://doi.org/10.1007/s11156-017-0663-8
Chi, J. D., & Su, X. (2017). The Dynamics of Performance Volatility and Firm Valuation. Journal of Financial and Quantitative Analysis, 52(1), 111–142. https://doi.org/10.1017/S0022109016000788
Combs, J. G., & Skill, M. S. (2003). Managerialist and Human Capital Explanations for Key Executive Pay Premiums: A Contingency Perspective. Academy of Management Journal, 46(1), 63–73. https://doi.org/10.5465/30040676
Costa, J. C. L., & Singh, J. (2013). Can Hedging Affect Firm Value? An Oil, Gas And Mining Perspective.
Dechow, P. M., & Dichev, I. D. (2002). Quality Earnings : The The Accruals Accrual Estimation Errors. The Accounting Review, 77(2002), 35–59.
Dewi, N. K. R. U., & Purnawati, N. K. (2016). No TitlePengaruh Market to Book Value dan Likuditas Terhadap Keputusan Hedging Pada Perusahaan Manufaktur di BEI. E-Jurnal Manajemen Unud, 5(1), 355 – 384.
Ehrhardt, M. C., Brigham, E. F. (2011). Financial management: theory and practice. United States of America: South-Western Cengage Learning.
Evans, D. S. (1987). The Relationship Between Firm Growth , Size , and Age : Estimates for 100 Manufacturing Industries. The Journal of Industrial Economics, 35(4), 567–581. Retrieved from https://econpapers.repec.org/RePEc:bla:jindec:v:35:y:1987:i:4:p:567-81
Ghozali, I. (2012). Aplikasi Analisis Multivariate dengan Program IBM SPSS 20 (Enam). Semarang: Badan Penerbit Universitas Diponegoro.
Goklas, F., & Wahyudi, S. (2016). Kebijakan Hedging Dan Faktor-Faktor Yang Mempengaruhinya (Studi Empiris Pada Perusahaan Non Finansial yang Terdaftar Di BEI Periode 2012-2014). Diponegoro Journal of Management, 5(4), 1–14.
Hanifan, A. F. (2017). MNC Sky Vision: Juara yang Selalu Merugi. Retrieved November 30, 2018, from https://tirto.id/mnc-sky-vision-juara-yang-selalu-merugi-bliH
Helfert, E. a. (2001). Financial Analysis Tools and Techniques: A Guide for Managers. New York, McGraw-Hill. (McGraw-Hill). New York. https://doi.org/10.1036/0071395415
Hull, J. C. (2018). Options, Futures and Other Derivatives (Ninth Edit, p. 849). Harlow: Pearson Education Limited.
Iyer, S. R., & Harper, J. T. (2017). Cash flow volatility and investor sentiment. Managerial Finance, 43(2), 178–192. https://doi.org/10.1108/MF-02-2016-0045
Klimczak, K. M. (2008). Corporate hedging and risk management theory: evidence from Polish listed companies. The Journal of Risk Finance, 9(1), 20–39. https://doi.org/10.1108/15265940810842393
Koonce, L., Miller, J., & Winchel, J. (2015). The Effects of Norms on Investor Reactions to Derivative Use. Contemporary Accounting Research, 32(4), 1529–1554. https://doi.org/10.1111/1911-3846.12118
Larcker, D., & Tayan, B. (2011). Corporate Governance Matters A Closer Look at Organizational Choices and Their Consequences. New Jersey: Pearson Education.
Marcus, Brealey, & Myers. (2008). Fundamental of Corporate Finance (Sixth). United States of America: McGraw-Hill Primis.
Moguillansky, G. (2003). From Capital Surges to Drought. (R. Ffrench-Davis & S. Griffith-Jones, Eds.), From Capital Surges to Drought. London: Palgrave Macmillan UK. https://doi.org/10.1057/9781403990099
Ng, S., & Daromes, F. E. (2016). Peran Kemampuan Manajerial Sebagai Mekanisme Peningkatan Kualitas Laba Dan Nilai Perusahaan. Jurnal Akuntansi Dan Keuangan Indonesia, 13(2), 174–193. https://doi.org/10.21002/jaki.2016.10
Nugraha, M. C. (2017). Peran Volatility Cash Flow Dan Kesempatan Bertumbuh Perusahaan Dalam Menekan Financial Distress Dengan Peningkatan Penggunaan Hedging Forward Contract. Universitas Atma Jaya Makassar.
Paminto, A., Setyadi, D., & Sinaga, J. (2016). The Effect of Capital Structure , Firm Growth and Dividend Policy on Profitability and Firm Value of the Oil Palm Plantation Companies in Indonesia. European Journal of Business and Management, 8(33), 123–134.
Purwanto, D. (2013). Rugi Kurs Laba PLN Anjlok. Retrieved from Kompas: Retrieved December 10, 2018, from https://ekonomi.kompas.com/read/2013/04/14/0957499/Rugi.Kurs..Laba.PLN.Anjlok
Repie, R. R., & Sedana, I. B. P. (2015). Kebijakan Hedging Dengan Instrumen Derivatif Dalam Kaitan Dengan Underinvestment Problem Di Indonesia. E-Jurnal Manajemen Unud, 384–398.
Scott, W. R. (2015). Financial accounting theory. Prentice Hall Canada (Seventh Ed). Totonto: Pearson.
Spence, M. (1973). Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355. https://doi.org/10.2307/1882010
Tumirin. (2005). Analisis variabel akuntansi kuartalan, variabel pasar, dan arus kas operasi yang mempegaruhi bid-ask spread. Jurnal Akuntansi & Audit Indonesia, 9(1), 61–75.
Vaughan, E. J., & Vaughan, T. M. (2014). Fundamentals of Risk and Insurance. The Journal of Risk and Insurance (Elevent Edition). United States of America: Wiley.
Published
2020-01-20
How to Cite
HARTONO, Hartono; PASOLORAN, Oktavianus; DAROMES, Fransiskus Eduardus.
Role of Hedging Mechanism in Maintaining Volatility Cash Flow and Growth Opportunity and Their Impact on Investor Reaction.
Jurnal Ilmiah Akuntansi dan Bisnis, [S.l.], v. 15, n. 1, p. 23-34, jan. 2020.
ISSN 2303-1018.
Available at: <https://ojs.unud.ac.id/index.php/jiab/article/view/51401>. Date accessed: 26 apr. 2024.
doi: https://doi.org/10.24843/JIAB.2020.v15.i01.p03.
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