Use of hedging and firm value (performance) nexus has received mixed attention due to conflicting results that broadly consider firms from the US and European contexts. This study investigates data from Asia-Pacific region to observe the interaction between use of hedging, value, and performance of nonfinancial firms. Results indicate hedging to be value enhancing irrespective of the three types of risks hedged: foreign currency, interest rate, and commodity price risk with foreign currency risk is the strongest driver. This nexus, however, is weaker for commodity price risk. Several moderation and robustness tests also confirm that profitable, highly levered, and high growth companies use derivatives for hedging to a higher extent. We forward that both reactive and proactive reasons behind hedging might be connected to corporate intention to reduce ‘reputation risk’.

Title

Journal of Economic Cooperation and Development

Publisher

The Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC)

Publisher Country

Turkey

Indexing

Scopus

Impact Factor

None

Publication Type

Both (Printed and Online)

Volume

46

Year

2025

Pages

55-100