Risikokommunikasjon og finansielle derivater : effekt på lønnsomhet og selskapsverdi

Abstract

This thesis addresses how firms’ risk communication and derivatives usage affect firm value and profitability. We have conducted content analyses of 447 annual reports on 66 companies listed on the Oslo Stock Exchange for the years 2006 to 2014. We used risk communicating words, as a proportion of the annual reports’ total words, and NUES ratings provided by EY, as variables for risk communication. For derivatives, both a dummy variable for usage/non-usage, and fair derivative values were investigated. The fair derivative values were measured as a proportion of the companies' total assets, where we considered asset derivatives, liability derivatives, and net derivatives. From the bivariate analyses, we discovered that risk communication had a non-linear relationship with firm value and profitability. At the same time, we observed that companies' focus on, and work with, risk communication had increased in the period from 2006 to 2014. This builds on the findings of Kallenberg (2002), which found that companies' risk and risk management efforts had increased from 1987 to 2001. In addition, from the initial analysis of the effect of derivatives usage, we found a negative correlation with firm value, but positive for profitability. The results of the multivariate analyses indicated that risk communication did not have any measurable impact on profitability or firm value. For the derivatives usage, we found that companies that use derivatives have higher firm value and profitability than non-users. The use of financial derivatives to reduce risk therefore appears to give a competitive advantage over those who do not choose to use derivatives. This supports Smith and Stulz (1985) who argue that financial risk management has an effect on firm value, in addition to several renown empirical studies. From fair values, we found that asset derivatives have a negative impact on firm value, but positive for profitability, given that you control for companies' profitability in measuring firm value. For profitability, we found that the net value of derivatives had a positive effect, but did not affect firm value. Liability derivatives are shown with no significant impact on either firm value or profitability.