An Empirical Study On The Impact Of The Use Of Foreign Exchange Derivatives On Enterprise Value

With the improvement of China’s economic opening to the outside world,the formation mechanism of RMB exchange rate is also undergoing continuous exploration and adjustment in the process of China’s exchange rate reform.While moderately relaxing exchange rate control,the exchange rate risk exposure of enterprises is also increasing,so the demand for foreign exchange risk management is becoming more and more urgent.In this case,China’s foreign exchange derivatives market is developing rapidly,and the number of enterprises using foreign exchange derivatives is increasing day by day.In recent years,whether the use of foreign exchange derivatives can improve the value of enterprises has attracted the attention of scholars at home and abroad.This paper aims to answer the following three questions: can listed companies use foreign exchange derivatives to significantly enhance the value of enterprises? What is the mechanism of the use of foreign exchange derivatives on enterprise value? For enterprises with different scale,nature and degree of marketization in the region,is there any difference in the effect of using foreign exchange derivatives on enterprise value?At the theoretical level,this paper combs and summarizes the literature at home and abroad on the impact of the use of foreign exchange derivatives on enterprise value,clarifies the theoretical basis of the research,and analyzes the path of the impact from five angles.In addition,this paper analyzes the development process and existing problems of China’s foreign exchange derivatives market and the current application of foreign exchange derivatives of Listed Companies in China.At the empirical level,in order to study the impact of the use of foreign exchange derivatives on enterprise value,this paper takes China’s A-share non-financial listed enterprises as the research object,establishes two empirical models for benchmark regression analysis,and carries out endogenous test and robustness test to ensure the reliability of regression results.Finally,it carries out mechanism analysis and heterogeneity analysis.The empirical results of this paper show that: first,17% of the listed companies in the research sample use foreign exchange derivatives,and the use of foreign exchange derivatives will significantly improve the enterprise value,including:the Tobin Q value of the enterprise is increased by 6.6%,and the return on net assets is increased by 1.1%;Secondly,it is verified that the application of foreign exchange derivatives will enhance the value of enterprises through five channels: reducing the exposure of enterprise exchange rate risk,reducing the agency cost of enterprises,alleviating the insufficient investment of enterprises,reducing the cost of enterprise financial distress and increasing the innovation investment of enterprises;Third,for large-scale enterprises,state-owned enterprises and enterprises with high degree of marketization in their location,the use of foreign exchange derivatives has a more obvious role in improving the value of enterprises.Finally,based on the empirical research conclusion,this paper puts forward countermeasures and suggestions to enterprise managers and policy makers from three perspectives: promoting the improvement and development of foreign exchange derivatives market,paying attention to the role of foreign exchange derivatives on enterprises and improving the disclosure rules of the use of foreign exchange derivatives.