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Derivatives usage and firm value

by Pande, Arjun

Abstract

This thesis analyzes a sample of large non-financial U.S. firms listed on the S&P 500 index to establish a concrete relationship between firm value and derivatives usage. Derivatives are widely utilized by firms to hedge various types of risks, however, the exact effects of derivatives usage and how such activities are perceived by the market are not very clear. An IV regression model is used since the decision to use derivatives is not exogenous. Both notional values and fair values of derivatives are considered in establishing a relationship with firm value. The results suggest that derivatives usage has a negative connotation and the market values user firms at a discount.

Note

Includes bibliographical references.

Administrative Notes

None

Copyright
Copyright restrictions apply.
Publisher
Colorado College
PID
coccc:5622
Digital Origin
born digital
Extent
84 pages : illustrations (some color)
Thesis
Senior Thesis -- Colorado College
Thesis Advisor
Fenn, Aju
Department/Program
Economics and Business
Degree Name
bachelor
Degree Type
Bachelor of Arts
Degree Grantor
Colorado College
Date Issued
2012