Firm value effects of derivatives hedging for risk exposure: An empirical research on Chinese listed enterprises

On the basis of risk management theory, using Tobin´s Q as a proxy for firm value, the paper examines the relationship of derivatives hedging and the firm value. Using database of the Chinese non-financial listed enterprises with commodity price-exposure and foreign exchange-exposure from 2007 to 2009, our finding shows that there is the significantly positive relationship between derivatives hedging for risk exposure and firm value in Chinese firm. And Evidence also suggests that the functions of derivatives hedging are better than the non-derivatives hedging methods.