THE INFLUENCE OF USING DERIVATIVES FOR HEDGING ON THE VALUE OF FIRMS IN THE MINING SECTOR LISTED IN THE INDONESIAN STOCK EXCHANGE

ABSTRACT: Firms are continuously expected to create strategies and manage their risks in order to achieve thefirm’s main goal, which is to maximize firm value or maximize shareholder welfare. Derivatives for hedging isone of the ways to improve firm value. In addition to derivatives for hedging, there are other important factorswhich may influence firm value and must be controlled, namely profitability and investment growth. Thepurpose of this study Is to determine the influence of using derivatives for hedging on the value of firms in themining sector listed in the Indonesian Stock Exchange (IDX) over the years of 2016 – 2018. Simultaneously,profitability and investment growth in this study are the control variables in this study.There are 48 firms as the population in this study, in which are mining sector firms listed in the Indonesian StockExchange (IDX) over the years of 2016 – 2018. 17 firms were selected as sample using the purposive samplingmethod. The data collection was conducted using the non-participant observation method. The data analysistechnique used was the regression analysis.Based on the results, the derivatives for hedging was found to have a positive and significant influence on thefirm’s value, while profitability and investment growth were controlled, thus did not influence firm value..

Keywords: firm value, derivatives, hedging, profitability, investment growth, foreign exchange exposure