Effectiveness of Foreign Exchange Derivatives Usage from Non-Financial Companies: A Brazilian Perspective ()
ABSTRACT
Objective: The present study analyses the financial statements of the Brazilian non-financial
companies that are listed at the Brazilian stock market (B3), which had foreign
currency indebtedness during the period of 2019, 2020 and 2021, to understand whether the use of foreign exchange
derivatives for hedging purposes have generated value or not. Methods: It was analysed the financial statements and
annual reports of the Brazilian non-financial companies that are listed at
B3, to raise information about their debt in foreign currency, and to understand
if they applied foreign currency derivatives for hedging purposes. After that, it
was made a descriptive statistics analysis, followed by an econometric study applying
the Fixed Effects and Random Effects methods, and a Hausman test to verify robustness. Results: The results of the estimations
indicate that the use of foreign currency derivatives for hedging purposes has a positive impact on companies’
profitability in moments of macroeconomic instability,
such as the COVID-19 pandemic. Also, they indicate
that foreign currency indebtedness has a negative impact on profitability. Contributions: The present study aims to enhance
the available literature regarding risk management
and value creation, with evidence that the use of hedging techniques can
improve companies’ value creation even in moments of unfavourable macroeconomic
scenarios.
Share and Cite:
da Silva, L. , Gutierrez, M. , Gouvea, R. and Moraes, C. (2023) Effectiveness of Foreign Exchange Derivatives Usage from Non-Financial Companies: A Brazilian Perspective.
Modern Economy,
14, 1550-1565. doi:
10.4236/me.2023.1411081.
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