Derivatives Hedging,Vertical Integration And Enterprise Risk Management

After more than 20 years of gold development period,China's metal industry has entered the adjustment period of structural reform.Enterprises are faced with the price fluctuation risk of upstream raw materials and downstream finished products,the exchange rate risk of import and export businesses,and the risk of market interest rate change when financing.Derivatives provide an effective tool for enterprises to transfer market risk,while vertical integration strategy focuses on long-term stable operation of enterprises.This paper focuses on these two risk management methods and conducts relevant research.On the basis of combing the current situation of domestic metal industry chain and the use of derivatives,this paper studies the relationship between derivatives hedging and vertical integration based on the data of domestic metal industry listed enterprises in 2009-2018,analyzes the impact path of derivatives hedging and vertical integration on enterprise performance,and then introduces risk factors to explore the two aspects of derivatives hedging and vertical integration The purpose of this paper is to provide relevant experience evidence and useful reference for enterprise risk management.In this paper,probit and logit models are used to study the relationship between derivatives hedging and vertical integration,and the risk management of derivatives hedging and vertical integration is analyzed through two-step process of processing effects.Based on the data of 140 listed companies in the metal industry,the main conclusions are as follows:first,the number of companies using derivatives in China's metal industry is increasing year by year,and the proportion of enterprises has increased from 28.26% in 2009 to 58.70% in2018,and the degree of vertical integration of enterprises in the sample has increased from38.27% in 2009 to 43.27% in 2018.Second,derivatives hedging and vertical integration have a positive role in promoting the return on total assets of enterprises.The use of derivatives has a greater contribution to the return on total assets than vertical integration,and derivatives hedging mainly plays a positive role in the return on total assets through the net profit rate,while vertical integration affects the return on total assets through the turnover rate of total assets.Third,when corporate risk is high,the risk management effect of derivatives hedging has declined,while the risk of vertical integration has declined The management effect is enhanced.Fourthly,there is a reverse relationship between derivatives hedging and vertical integration,and there is a certain substitution effect between the two risk management methods.Fifthly,in the metal industry,private enterprises with large scale,high overseas income and high turnover rate of total assets tend to use derivatives for risk management.Finally,combined with the research results,this paper puts forward four enlightenments and suggestions: according to the actual situation of enterprises,choose appropriate risk management methods,flexibly use derivatives portfolio,explore the new application of "insurance + futures" in the metal industry,and further improve the derivatives market environment.