Conference Paper/Proceeding/Abstract 192 views
Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
Rui Ye 
,
Jin Jiang,
Pengfei Gao ,
Kefei You ,
Hongfang Chen
,
Jin Jiang,
Pengfei Gao ,
Kefei You ,
Hongfang Chen
BFWG Annual Conference 2025
Swansea University Author:
Pengfei Gao
Abstract
This study examines the impact of financial derivative usage on firm value and the moderating role of corporate digital transformation (DT) in this relationship. Employing data from Chinese nonfinancial listed firms, we find that derivative usage is negatively associated with firm value. However, gr...
| Published in: | BFWG Annual Conference 2025 |
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| Published: |
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa70715 |
| Abstract: |
This study examines the impact of financial derivative usage on firm value and the moderating role of corporate digital transformation (DT) in this relationship. Employing data from Chinese nonfinancial listed firms, we find that derivative usage is negatively associated with firm value. However, greater DT mitigates this adverse effect. We further investigate this issue by analyzingfirms’ motives for derivative usage, the nature of firm ownership, and different types of digital technologies used. Classifying derivative motives and trading outcomes into effective hedging, ineffective hedging, and speculations, we show that the value-reduction impact of derivative usage is primarily driven by the latter two, and DT mitigates the impact of ineffective hedging but not that of speculation. Furthermore, we distinguish between state-owned (SOEs) and non-state-owned enterprises (non-SOEs). For non-SOEs, results mirror the overall sample, although both the valuereducing impact of derivative usage and the moderation effect of DT are more profound than in the full sample and the SOEs, regardless of derivative motives. In contrast, for SOEs, effective hedging is found to enhance firm value, but DT weakens this relationship, possibly due to SOEs’ preference for stability, whereby digital tools may unintentionally facilitate over-hedging. Finally, among the five different types of digital technologies—artificial intelligence, big data, cloud computing, blockchain, and digital technology applications—we find the moderation effect significant only for the first four, which emphasize monitoring and control of derivatives transactions, but not for the last, which focuses on firms’ manufacturing and marketing procedures. |
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| College: |
Faculty of Humanities and Social Sciences |