Abstract To reveal the mechanism and effect of financial derivatives on the risk of corporate cash flow fluctuations,this study collects “derivative” data in Shanghai and Shenzhen stock exchange from 2015 to 2018, and examines the relationship between financial derivative investment and cash flow fluctuation of Chinese listed manufacturing companies based on Heckman two-stage model. Empirical results show that financial derivatives reduce the risk of cash flow fluctuation, and this effect of financial derivative investment is moderated by the level of operating risk, information asymmetry, as well as agency cost., which clarifies the demanders and influence mechanism of financial derivatives. Further analysis shows that foreign exchange derivatives and commodity derivatives can reduce the risk of cash flow volatility, but the effect of interest rate derivatives is not significant; financial derivatives increase the non-systematic risk but have no effect on systemic risk; financial derivatives fail to enhance the corporate value.
LIU Jingjian,XU Yiqi,LI Huizhu. Research on Financial Derivatives Investment and Corporate Cash Flow Volatility Risk[J]. Chinese Journal of Management, 2021, 18(1): 127-.
