HEDGING RISK MANAGEMENT DAN YANG MEMPENGARUHINYA

Abstract

Risk management theory provides several explanations about the use of derivatives as a means of hedging by companies to reduce fluctuations in cash flows, profits, and firm value. The purpose of this study is to find out some variables that encourage companies in Indonesia to carry out hedging activities to reduce the company's financial risk. Given that the use of hedging risk management techniques is very complex, company managers must be able to calculate how the use of hedges will provide the expected benefits with the costs incurred for the use of hedging instruments. The research sample was 55 primary and secondary
companies listed on the Indonesia Stock Exchange in the period 2015-2017. This type of research is associative quantitative research. Data analysis uses logistic regression analysis, with the dependent variable being a hedging decision that is proxied by a dummy variable by looking at the company's financial statements, if hedging  is rated 1 and 0 for companies that do not hedge. While the independent
variables used in this study are Company Size, Opportunities for Growth, Leverage, and Liquidity. The logistic regression method shows that from the four variables used in this study, only one variable is the size of the company that affects the probability of the company to use derivative instruments as hedging
activities, while the variable growth opportunities, leverage and liquidity have a significant negative effect on hedging decisions.
Keywords: Hedging, Firm Size, Growth Opportunities, Leverage, Liquidity