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马来西亚的公司被曝光存在不同类型的风险。这些风险包括价格交换的波动、利率及大宗商品价格。不管它是否是被曝光改变交换率的跨国公司,是利率公布的高杠杆金融机构,或是运输公司被爆料改变燃料价格,种植园公司改变棕榈油价格,这些公司的管理者都应该有一个正派的和良好的风险管理实践。作为股东委派的经理,他们的主要角色是使股东财富最大化。因为这些风险可以给公司的价值和股东的财富带来负面影响,风险管理的做法被认为是作为经理最重要的问题之一。
一般来说,风险管理可以两种方式进行。第一个风险管理方法是多样化。伴随着多样化,企业可以在操作商业证券投资组合时坚定的采用多元化战略(SPRČIĆ, 2007)。在马来西亚,森那美是多元化风险管理的典型例子。其业务涉及种植、房地产、汽车、医疗、能源等。然而,这种方法似乎对许多公司来说是一种挑战,因为没有那么多的公司有能力集中于不同领域的业务。
课题研究的理由-Justification Of Research Topic
Companies in Malaysia are exposed to different kinds of risk. These risks include volatility of exchanging price, interest rate and commodity price. Whether it is a multinational company with the exposure of changing exchanging rate, a high leverage financial institution with the exposure of interest rate, a transportation company with the exposure of changing fuel price and a plantation company with the exposure of changing palm oil price, managers of these companies should have a proper and good risk management practice. As a manager delegated by shareholder, their primary role is to maximize the shareholder wealth. Since these risks can bring negative impact to the value of firm and shareholder’s wealth, the practice of risk management is considered as one of the most important issue for manager.
Generally, risk management can be conducted into two ways. The first risk management approach is diversification. With diversification, companies can employ a diversification strategy in the portfolio of businesses operated by the firm (SPRČIĆ, 2007). In Malaysia, Sime Darby is the typical example of managing risk by diversification. Their businesses involve in plantation, property, automobile, healthcare, energy etc. However, this approach seems challenging for many companies since not many companies have the ability to focus in different field of businesses.
The second approach is hedging. This approach is rather easy than diversification. Most of the companies in Malaysia use this approach to manage risk. Financial derivatives are used as tool to conduct hedging. Derivative like option, future, forward and swap is commonly used as hedging tool. With the application of these derivatives as hedging tool, companies are protected from the fluctuation of exchange rate, interest rate and commodity price. As a result, companies can maintain a stable cash flow which is critical for the continuity of their business.
According to the perfect capital market hypothesis of Modigliani and Miller, the value of firm is independent of hedging policy (Karim Ben Khediria and Didier Folus, 2010). This is because shareholder can diversify their portfolio to minimize risk, so no value is created through hedging performed by the company. However, perfect capital market does not exist in real world. Firms face a lot of friction such as financial distress cost, taxes, transaction cost and asymmetric information. This creates a rationale for the firms to lower the volatility of earning and cash flow through hedging and in turn create extra value for the firms (YANBO JIN and PHILIPPE JORION∗, 2006).
In this paper, we examine how firms aware of importance of practicing risk management. If they are, what kind of risk management tool and strategy they use to protect themselves from the volatility of exchange rate, interest rate and commodity price. With the implication of imperfect capital market condition, we examine how the practice of risk management affects the value of the firm. We are going to test the hypothesis which claims that risk management can increase value of the firm.
问题陈述-Problem Statement
One of the main concerns we need to address in this paper is what the meaning of risk management. Risk management is generally defined as the process of identification, analysis and either acceptance or mitigation of uncertainty in investment decision-making. Thus, risk management should be conducted in a way to maximize shareholder’s wealth. Managers always use large number of derivatives to manage risk. However, if derivatives are used in an unethical way, it may make loss to the shareholder. Société Générales scandal is one of the good examples of this. In January 2008, the bank Société Générale lost approximately €4.9 billion because of the overtrading of financial derivatives (Bittermann, 2008). Sometimes, managers tend to use the derivatives to speculate but not hedging because conflict of interest arises between shareholder and manager. The risk of making loss in speculating is bear by the shareholder. However, shareholder may be delighted if the manager earn extra profit in speculating and give the manager bonus. Thus, it is very critical to ensure that managers use derivative in an ethical to maximize shareholder which is the primary role of a manager.
Another issue we need to address in this paper is the lack of development of derivatives market in Malaysia (Shamsher, 2007). Nowadays, there are only two types of future market in Malaysia. They are future of KLCI and future of crude palm oil. Thus, firm have less choice if they want to conduct commodity price hedging. Only the plantation firms in Malaysia can use future market to hedge their palm oil exposure.
The last issue we need to address here is whether the risk management practice conducted by the managers creates extra value for the firm and shareholder. Although the implication of imperfect market condition tells us that it will, we still have to examine this issue in this research.
目的陈述-Purpose Statements
To study how manager manage risk and what instrument they use to manage different kind of risks.
To examine how the misuse of derivatives bring negative impact to the companies.
To study whether the practice of risk management affect the value of the company.
To examine the difference in value between the companies who practice hedging and companies who do not practice hedging.
假设-Hypothesis
H0: Derivatives like option, future, forward and swap are used by manager to manage risk.
H1: Derivatives like option, future, forward and swap are not used by manager to manage risk.
H0: Misuse of derivatives brings negative impact to firm.
H1: Misuse of derivatives does not bring negative impact to firm
H0: Risk management creates extra value for firm.
H1: Risk management does not create extra value for firm.
H0: Companies who practice hedging have higher value than companies who do not practice hedging.
H1: Companies who practice hedging have lower value than companies who do not practice hedging.
研究设计-Research Design
First, conduct a review of literature which has the link with this topic in order to develop the hypothesis. In order to conduct this research, deduction approach has been used. This is because there is already a theory stated that risk management will create extra value for the company. Therefore, hypothesis can be deducted from this theory. Then, we have to conduct our research to test the correctness of this hypothesis. Generally there are 5 steps involved deduction approach process. First, hypotheses are deducted from the theory. Second, these hypotheses are expressed in operational term so that a relationship can be proposed between two specific variable and concept. Third, test the hypotheses. Fourth, examine the outcome of the inquiry. Fifth, modify the theory in the light of finding if necessary (Saunders, 2009). There is some advantage of using deduction approach to conduct. First, time is saved. This is because the collection of data and analysis of data are one take. Second, we also will not indulge in high risk as we are not fear of unable to build any theory as we just need to test the existing theory.
数据收集-Data Collection
We focus in collecting quantitative date since we conduct research by deduction approach. Secondary data will be collected in conducting this research. By definition, secondary data is the data that is collected by someone other than the user. The main reason that project will use the secondary data analysis is to save time that would otherwise be spent collecting data from very beginning stage. Since secondary data was collected for another may be for another purpose, it may sometime insufficient for the new user. We can obtain data sources for this project by searching through the internet, journal, and the historical data that was stored in anywhere. Our research samples mainly consist on companies which listed in Bursa Malaysia. This is because data can be obtained through their annual report.#p#分页标题#e#
时间表-Timescale
October 2012: Review of literature
November 2012: Draft literature review
December 2012: Review research method and agree research strategy
January - February 2012: Collection and analysis of data
March – April 2012: First draft of research paper
May 2012: Completion of research paper
资源-Resources
Hardware and software are needed in this research. Hardware we need include computer with internet access, stationeries and paper. Software we need include Microsoft Word to compile our paper, Microsoft PowerPoint to present our research and SPSS for statistical analysis purpose.
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