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Conference Paper/Proceeding/Abstract 268 views

Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China

Rui Ye Orcid Logo, Jin Jiang, Pengfei Gao Orcid Logo, Kefei You Orcid Logo, Hongfang Chen

BFWG Annual Conference 2025

Swansea University Author: Pengfei Gao Orcid Logo

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...

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Published in: BFWG Annual Conference 2025
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URI: https://cronfa.swan.ac.uk/Record/cronfa70715
first_indexed 2025-10-17T09:03:22Z
last_indexed 2025-12-05T18:10:19Z
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spelling 2025-12-04T10:48:08.5159478 v2 70715 2025-10-17 Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China bd00b4a498e1c45d25e0fcdab1838b26 0009-0008-7818-1231 Pengfei Gao Pengfei Gao true false 2025-10-17 CBAE 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. Conference Paper/Proceeding/Abstract BFWG Annual Conference 2025 0 0 0 0001-01-01 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University Other 2025-12-04T10:48:08.5159478 2025-10-17T10:00:10.3057521 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Rui Ye 0000-0002-4021-8093 1 Jin Jiang 2 Pengfei Gao 0009-0008-7818-1231 3 Kefei You 0000-0001-7253-5838 4 Hongfang Chen 5
title Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
spellingShingle Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
Pengfei Gao
title_short Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
title_full Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
title_fullStr Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
title_full_unstemmed Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
title_sort Financial Derivative Usage, Corporate Digital Transformation and Firm Value: Evidence from China
author_id_str_mv bd00b4a498e1c45d25e0fcdab1838b26
author_id_fullname_str_mv bd00b4a498e1c45d25e0fcdab1838b26_***_Pengfei Gao
author Pengfei Gao
author2 Rui Ye
Jin Jiang
Pengfei Gao
Kefei You
Hongfang Chen
format Conference Paper/Proceeding/Abstract
container_title BFWG Annual Conference 2025
institution Swansea University
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 0
active_str 0
description 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.
published_date 0001-01-01T05:32:09Z
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score 11.096007

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