Contents

List of Tables

List of Figures

Abbreviations

Preface

Chapter 1

Emerging Issues in the Risk Management, Corporate Governance and Firm Value Relationships

1.1. Emerging Issues of Hedging and Firm Value

1.2. Scope for the Book

1.3. Objectives of the Book

1.4. Contributions of the Book

1.5. Statement of the Significance for Capital Markets

1.6. Outline of the Book

Chapter 2

Risk Management, Corporate Governance, Accounting Information: Issues and Theories

2.1. Introduction

2.2. Risk Management, Corporate Governance and Accounting Information

2.2.1. Derivatives as a Risk Management Tool

2.2.2. Overview of the Global Derivatives Market

2.2.3. Derivatives in the Malaysian Capital Market

2.2.4. Corporate Governance in Malaysia

2.3. Agency Theory and Corporate Governance

2.3.1. Information Asymmetry Theory

2.3.2. Managerial Risk Aversion Theory

2.3.2.1. Family Ownership

2.3.3. Internal Control and Monitoring Effect Theory

2.4. Financial Risk Management Theories

2.4.1. Financial Distress Theory

2.4.2. Tax Incentives Theory

2.4.3. Underinvestment Theory

2.4.4. Economies of Scale Theory

2.4.5. Diversification Theory

2.4.6. Hedging Substitutes Theory

2.5. Limitations of the Existing Literature

2.6. Summary

Chapter 3

Econometric Models for Hedging, Corporate Governance and Firm Value

3.1. Introduction

3.2. Conceptual Framework

3.3. Development of Hypotheses

3.3.1. Commodity Risk Exposure

3.3.2. Hedging and Firm Value

3.3.3. Derivatives Disclosure

3.3.4. Institutional Ownership

3.3.5. Managerial Risk Aversion

3.3.6. Agency Costs and Monitoring

3.3.7. Control Variables

3.3.7.1. Leverage

3.3.7.2. Tax Incentives

3.3.7.3. Investment Growth

3.3.7.4. Firm Size

3.3.7.5. Diversification Effect

3.3.8. Hedging Substitutes

3.3.9. Summary of the Variables Used

3.4. Research Design and Methodology

3.4.1. Commodity Risk Exposure

3.4.2. Firm Value

3.5. Econometric Models

3.5.1. Corporate Governance and Hedging

3.5.2. Hedging and Firm Value

3.6. Panel Data Analysis

3.7. Data and Sampling

Chapter 4

Analysis of the Hedging, Corporate Governance and Firm Value Relationships

4.1. Introduction

4.2. Commodity Risk Exposure in Malaysia

4.2.1. Introduction

4.2.2. Commodity Risk Exposure and Stock Return (H1)

4.2.3. Commodity Risk Exposure and Hedging (H2)

4.2.4. Summary

4.3. Hedging and Firm Value (H3)

4.3.1. Descriptive Statistics

4.3.2. Correlation Analysis

4.3.3. Univariate Analysis

4.3.4. Pooled-OLS Regressions

4.3.5. Fixed-Effects Panel Regressions

4.4. Corporate Governance and Hedging (H4 to H11)

4.4.1. Derivatives Disclosure (H4)

4.4.2. Institutional Ownership (H5)

4.4.3. Managerial Ownership (H6)

4.4.4. Managerial Stock Options (H7)

4.4.5. Family Ownership (H8)

4.4.6. BOD Independence (H9)

4.4.7. Audit Committee Independence (H10)

4.4.8. Risk Management Committee (H11)

4.4.9. Simultaneous Equation Analysis Using TSLS

4.4.10. Simultaneous Equation Analysis Using GMM

4.5. Control Variables

Chapter 5

Theoretical Implications

5.1. Introduction

5.2. Hedging and Firm Value

5.3. Asymmetric Information Theory

5.4. Managerial Risk Aversion Theory

5.5. Monitoring Effect Theory

5.6. Financial Risk Management Theories

5.7. Summary of the Results and Analysis

Chapter 6

Corporate Governance, Risk Management and Accounting Policy Implications

6.1. Introduction

6.2. Policy Implications for Corporate Governance and Risk Management

6.3. Policy Implications for Accounting Standards and Capital Market Regulations

Chapter 7

Summary, General Findings and Conclusions for Strategies

7.1. Introduction

7.2. Summary of the Results and Findings

7.3. Suggestions for Future Studies

7.4. Concluding Remarks

References

Appendices

Appendix A: Diagnostic Tests of Pooled-OLS and Fixed-Effect Models

Appendix B: Diagnostic Tests of Probit and Tobit Models

Appendix C: Diagnostic Tests of TSLS and GMM Models

Appendix D: Propensity Score Matching Tests

Author’s Contact Information

Index