Derivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchange

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dc.contributor.advisorHolman, Glenen_ZA
dc.contributor.authorHart, Kevinen_ZA
dc.date.accessioned2015-06-25T13:49:07Z
dc.date.available2015-06-25T13:49:07Z
dc.date.issued2012en_ZA
dc.descriptionIncludes bibliographical references.en_ZA
dc.description.abstractIn the absence of market imperfections, risk management cannot create value. There would be no demand for hedging instruments (including derivatives) in the absence of taxes, agency costs, information asymmetry or transaction costs. Financial theory proposes two main sets of explanations for risk management: firstly, risk management is a means to maximize firm value by reducing the costs of financial distress (hedging can allow firms to increase debts capacity and raise funds at lower costs), reducing taxation (reducing earnings volatility and therefore decreasing expected taxes) and reducing the effects of information asymmetry. Secondly, the reasons to hedge can be found by reference to economies of scale: the majority of studies have found a positive correlation between firm size and the use of derivatives, although size is believed to be a constraining factor rather than a determining factor for risk management. It is proposed by Schiozer and Saito (2009) that firms in emerging economies such as Brazil, Argentina (and arguably Egypt), manage risks for different reasons when compared to mature economies such as the US. Emerging economies are often characterized by high volatility of exchange and interest rates. Additionally, there is often a scarcity of domestic funding that leads firms to raise funds on foreign capital markets to finance investment projects. Foreign denominated debt has always proved to produce significant risk exposure for emerging market firms. This research was undertaken to gain insight into the use of derivatives by Egyptian firms. The majority of previous research into derivative usage has focused on developed economies with little similar research into emerging economies and even less research into Middle Eastern economies such as Egypt.en_ZA
dc.identifier.apacitationHart, K. (2012). <i>Derivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchange</i>. (Thesis). University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax. Retrieved from http://hdl.handle.net/11427/13105en_ZA
dc.identifier.chicagocitationHart, Kevin. <i>"Derivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchange."</i> Thesis., University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2012. http://hdl.handle.net/11427/13105en_ZA
dc.identifier.citationHart, K. 2012. Derivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchange. University of Cape Town.en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Hart, Kevin AB - In the absence of market imperfections, risk management cannot create value. There would be no demand for hedging instruments (including derivatives) in the absence of taxes, agency costs, information asymmetry or transaction costs. Financial theory proposes two main sets of explanations for risk management: firstly, risk management is a means to maximize firm value by reducing the costs of financial distress (hedging can allow firms to increase debts capacity and raise funds at lower costs), reducing taxation (reducing earnings volatility and therefore decreasing expected taxes) and reducing the effects of information asymmetry. Secondly, the reasons to hedge can be found by reference to economies of scale: the majority of studies have found a positive correlation between firm size and the use of derivatives, although size is believed to be a constraining factor rather than a determining factor for risk management. It is proposed by Schiozer and Saito (2009) that firms in emerging economies such as Brazil, Argentina (and arguably Egypt), manage risks for different reasons when compared to mature economies such as the US. Emerging economies are often characterized by high volatility of exchange and interest rates. Additionally, there is often a scarcity of domestic funding that leads firms to raise funds on foreign capital markets to finance investment projects. Foreign denominated debt has always proved to produce significant risk exposure for emerging market firms. This research was undertaken to gain insight into the use of derivatives by Egyptian firms. The majority of previous research into derivative usage has focused on developed economies with little similar research into emerging economies and even less research into Middle Eastern economies such as Egypt. DA - 2012 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 2012 T1 - Derivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchange TI - Derivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchange UR - http://hdl.handle.net/11427/13105 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/13105
dc.identifier.vancouvercitationHart K. Derivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchange. [Thesis]. University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2012 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/13105en_ZA
dc.language.isoengen_ZA
dc.publisher.departmentDepartment of Finance and Taxen_ZA
dc.publisher.facultyFaculty of Commerceen_ZA
dc.publisher.institutionUniversity of Cape Town
dc.subject.otherFinanceen_ZA
dc.titleDerivatives usage in Egypt : a study of the use of derivative financial instruments by Egyptian companies listed on the Egyptian Stock Exchangeen_ZA
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationnameMComen_ZA
uct.type.filetypeText
uct.type.filetypeImage
uct.type.publicationResearchen_ZA
uct.type.resourceThesisen_ZA
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