Cuadernos de Administración
Print version ISSN 0120-3592
SIERRA GONZALEZ, Jaime Humberto. Coverage with derivatives in Colombian manufacturing companies: analysis prior to the opening of the Colombian stock exchange derivatives market. Cuad. Adm. [online]. 2010, vol.23, n.41, pp. 237-260. ISSN 0120-3592.
The use of derivative instruments is especially important in risk management because it directly influences the net worth of organizations and their potential to generate value. This study explores an explanatory hypothesis for the Colombian industrial and commercial companies’ use of derivative instruments before the Colombian Stock Exchange Derivatives Market opened. This article analyzes two hypotheses proposed in international literature: the use of derivative instruments by companies suffering from financial stress or enjoying financial sophistication and a combination of the two. To do so, a logistic regression model was used, which evidences that, in the case of Colombian companies, financial stress and financial sophistication are important reasons for using derivative instruments.
Keywords : derivatives; risk management; financial stress; financial sophistication; logistic regression.