Determinants of Corporate Hedging Activities with Financial Distress as a Moderating Variable

Abstract

. This study aims to explore determinant variables of corporate hedging activities with financial distress as a moderating variable based on Agency Theory. Determinant variables tested were leverage, institutional ownership, company size, and company growth opportunity. Several companies in Indonesia have carried out hedging activities to protect operational and financial risks resulting from international trade. Sampling used with a purposive sampling technique and selected 165 companies from all companies listed on the Indonesia Stock Exchange in 2012-2018. This study found that leverage, institutional ownership, company size, and company growth opportunity significantly affect corporate hedging activities. Moreover, financial distress strengthens the effect of the independent variables on the dependent variable.