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Corporate Hedging and Stock Market Dynamics: Evidence from PSX

Author

Listed:
  • Ahtisham Imtiaz

    (Relationship Manager, National Bank of Pakistan)

  • Aqueel Imtiaz Wahga

    (Assistant Professor, Department of Economics, Government College University, Lahore, Pakistan)

  • Syed Fakher Abbas Zaidi

    (Business Consultant, STEDEC Technology, Pakistan)

  • Safyan Majid

    (Assistant Professor, Department of Commerce and Finance, Government College University, Lahore, Pakistan)

Abstract

The purpose of the paper is to examine the impact of corporate hedging practices such as derivative usage on stock market behavior of the firms. The study employed the data of financial sector of Pakistan for firms that are listed in the Pakistan Stock Exchange. The economy of Pakistan faced several challenges and risk during the past five years such as Covid-19, climate change, political uncertainty, and economy policy uncertainty. Hence, it provided a solid ground to investigate the viability of derivative usage in the adverse economic environment. The sample consisted of 111 firms. The results indicated that hedging has significant impact on stock returns and stock returns volatility. The study concludes that firms that use derivative can yield positive stock returns and influence volatility in returns

Suggested Citation

  • Ahtisham Imtiaz & Aqueel Imtiaz Wahga & Syed Fakher Abbas Zaidi & Safyan Majid, 2023. "Corporate Hedging and Stock Market Dynamics: Evidence from PSX," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(3), pages 580-586.
    • Handle: RePEc:rfh:bbejor:v:12:y:2023:i:3:p:580-586
    DOI: https://doi.org/10.61506/01.00072
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    References listed on IDEAS

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