Asia Pacific University Library catalogue

A project submitted in partial fulfillment of the requirements of Asia Pacific University of Technology and Innovation for the degree of B.A. (Hons) in Banking and Finance with specialism in Investment and Risk Management (UC3F1802BAF(IRM)).

Over the recent decade, firms increasingly using derivatives to hedge their position. Derivative usage is one of the hedging techniques used in protecting firms from different kind of risks. There has been considerable discussion in the academia of whether derivative can be value relevant or not. This is related to both risk management and value maximization perspectives in terms of theory including Modigliani and Miller Theory and Arbitrage Pricing Theory. The main purpose of this research is to investigate the impact of derivative usage in non-financial firms and to identify whether the use of financial derivative for hedging purpose is a value increasingly strategy for firms with exposure to financial risks. Secondary data and quantitative approach were used and a sample of 20 non-financial firms in terms of market capitalization form year 2012 to 2017 is included in this study. TO carry out the analysis, ordinary least square and panel data techniques are used in estimating the model. this research concluded that he usage of derivative could not improve the firm value. All interest rate, foreign currency and commodity derivatives are found to be insignificantly related to firm value.