The Influence of Liquidity, Growth Opportunities, and Firm Size on Non-Finance Companies’ Hedging Policy in Indonesia Stock Exchange

ABSTRACT: Hedging is a policy done by a corporation in order to manage the possible risk caused by the exchange rate fluctuation. The purpose of this study is to determine the significance of the influence of liquidity, growth opportunities, and firm size on hedging policies. The study was conducted on non-financial companies in Indonesia Stock Exchange in the period of 2018. The study used purposive sampling technique with the number of samples of 449 companies. Data collections were conducted by non-participant observation method namely through financial report data published on the website www.idx.co.id. The analysis technique used in this study is logistic regression analysis. The results of hypothesis testing show that the liquidity which proxied by current ratio and the growth opportunities proxied by market to book value equity has negative, insignificant influence on hedging decision. Firm size has significance and positive influence on hedging decisions.
KEYWORDS: firm size, growth opportunities, hedging decision, liquidity