A Case Study Of Futures Speculation In Hangzhou Haoyue Personal Care Co.

Due to the rapid development of the futures market in China in recent years,the enthusiasm of listed companies to participate in futures hedging has been greatly increased,but at the same time,problems of insufficient risk awareness,whitewashing speculative behavior,and deviation from the original purpose of hedging have also emerged.Since 2021,there have been more than five incidents of listed companies forming significant losses due to their participation in futures investment.In this paper,the so-called hedging process claimed by the company is reviewed and analyzed by applying the four basic principles of hedging,based on the review of relevant domestic and foreign literature,theories on hedging and speculation,and the review of relevant literature.As a result,it was found that Haoyue Care Company was practicing futures speculation in the name of hedging,and there were wrong practices such as concealment and concealment.Then,based on the fraud triangle theory,we analyzed the motivation of the futures speculation of Haoyue Care from three perspectives of pressure,opportunity and excuse.The stress factors were found to be mainly: company performance decline,industry downturn and continuous stock price decline.The opportunity factors are: the lack of checks and balances due to the dominance of one share in a family-like enterprise;the lack of supervision due to the dichotomy of control and operation;the lack of supervision due to the lack of several positions;the abundance of monetary capital;the deficiencies of internal control;the asymmetry of information that encourages speculative behavior;the low penalty related to false disclosure;and the volatility of futures prices that brings more speculative opportunities.The excuses were the name of hedging risk,the "good will" to earn extra income for the company,and the illusion of "getting back the capital".Listed companies are public companies and involve many stakeholders.The company turned to futures speculation and "sold short" high-risk financial derivatives that were not directly related to its business,resulting in huge losses,and later tried to hide the fact of futures speculation by hedging.The analysis of Haoyue Care inspires us that reducing and preventing corporate speculation requires not only strict external supervision,but also strengthening and improving internal supervision from within the company.Only a combination of internal and external,the two-pronged approaches can minimize speculation and eliminate the wrong practice of covering up fraud.The paper makes the following recommendations: optimize the company’s shareholding structure and effectively regulate the rights of decision-makers and management;strengthen risk prevention.Clarify the authorization and approval system;bring into play the internal supervision function;cultivate a corporate culture of integrity;increase the intensity of corporate information disclosure,etc.Suggestions for external regulation: improve the relevant legal system and increase the penalty for false disclosure;increase the requirement of mandatory disclosure.The paper can provide reference for preventing high-risk behaviors such as futures speculation by listed companies,and also provide reference and inspiration for other enterprises in China to rationally participate in derivatives trading and pay attention to speculative risks.