|
With the bretton woods system’s disaggregation, the world economics’ integration, and the development of modern communication technology, computer technology and relevant financial of theory, Since the 1980s, the rapid development of derivatives make it to be an important tool in modern financial market. Every year, the numbers of enterprises who use financial derivatives are steadily rising. The International Swaps and Derivatives Association reports that the notional value of outstanding OTC swap contracts increased from＄11.3 trillion in 1994 to more than＄60 trillion by mid-2000. In 2008, the Global Exchange derivatives’turnover is 17.65 trillion, an increase of 13.7%, in which the turnover of futures is 8.291 trillion and the turnover of option is 9.361 trillion. But those only show that companies use financial derivatives on external motivation. In general, the company holds the financial derivatives for three purposes, hedging, speculating, and arbitrating. But hedging is more important than others. This is interesting because financial theory tells us that corporate risk management enhances value only in the presence of costly market imperfections.In this context, this article studies the mining companies from theoretical and empirical research, to find the use of derivatives motivation, and the impact on the performance. This paper is on the basis of relevant literature,. Firstly analyzing with the motives of using derivative financial instruments, Including tax motivation, motivation for risk-averse management, motivation to avoid the less investment, and scale. Where the tax motivated is the focus of this study. Secondly, based on the first step, continue to analyze whether the use of derivatives for corporate risk management is to improve the business performance. Finally, by comparing the domestic and foreign enterprises in using derivatives for risk hedging situation, the China’s enterprises should pay attention to the use of derivatives aspects and problems. This paper selects 2007-2009 mining industry’s annual financial report to be the study sample, using logic regression and multiple linear regressions to study the motivation for the use of derivative instruments and analysis the results of performance, and we use the SPSS statistical software. The empirical results show that the motivation of mining company using derivatives for hedging is the tax motivation and the scale. Because only the effective tax rate, asset-liability ratio and the size of the company are through a significant test. In the second step, we use EPS as a proxy for measuring performance of the company, because the company’s ultimate goal is to maximize shareholder’s value. In this regression, The following independent variables (Whether use of derivatives, a large proportion of shareholding, the total compensation) are all through significant test, This shows that the use of derivatives does improve the performance of the company, In addition, in the process of improving performance of the company, a large proportion of shareholding, and total compensation also played a role.In the process of analysis that some variables are not significant, we have found that the Chinese government is too restrictive, leading to the underdevelopment of domestic derivatives market, and the available derivative instruments are very few. Compared with developed countries, China’s financial derivatives markets have a great gap, This makes China in the international competition at a disadvantage situation. So in the actual situation, to speed up China’s financial derivatives market building, we must require the cooperation of all parties, including government agencies, banking institutions, enterprises and individuals.
|