Corporate Use of Derivatives in Hong Kong and Singapore: A Survey

Macquarie Applied Finance Centre Research Paper No. 23

50 Pages Posted: 8 Nov 2002

See all articles by Elizabeth A. Sheedy

Elizabeth A. Sheedy

Macquarie University Department of Applied Finance; Financial Research Network (FIRN); Macquarie University, Macquarie Business School

Date Written: July 2001

Abstract

This survey of corporate risk management practice in Hong Kong and Singapore examines the use of derivatives and the oversight of risk management programs in 131 firms. The survey format is the same as that used previously by the Wharton School in its survey of US non-financial corporations, to allow for cross-country comparisons. The analysis finds very little difference in risk management practice between Hong Kong and Singapore. When these two Asian centres are compared with the United States, the survey finds that a higher proportion of firms in Hong Kong and Singapore use derivatives and they do so with greater intensity. Firms in Hong Kong and Singapore are more likely than their US counterparts to use selective or active hedging strategies based on market views. Therefore it is worrying to note some significant gaps in the oversight of risk management in these firms, especially in relation to reporting and valuation of derivatives. The survey finds that only a minority of firms in Hong Kong and Singapore have implemented risk-adjusted performance measurement for treasury so it is unclear whether or not their activities add value for owners.

Keywords: derivatives, risk management, non-financial corporations, Asia, Hong Kong, Singapore, hedging, speculation

JEL Classification: F3, G3, L2

Suggested Citation

Sheedy, Elizabeth A., Corporate Use of Derivatives in Hong Kong and Singapore: A Survey (July 2001). Macquarie Applied Finance Centre Research Paper No. 23, Available at SSRN: https://ssrn.com/abstract=313105 or http://dx.doi.org/10.2139/ssrn.313105

Elizabeth A. Sheedy (Contact Author)

Macquarie University Department of Applied Finance ( email )

Room 739, 4 Eastern Road
Macquarie University
North Ryde, NSW 2109
Australia
61-2-9850 7755 (Phone)
61-2-9850 7281 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

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