Enterprise risk management in Portugal

: use of derivatives and value creation

Abstract

The importance of risk management has become increasingly evident in recent years, with an increasing need for companies to manage their risks effectively. As a result, risk management has become a fundamental aspect of corporate governance. It is important to manage risk, even more, in times of volatility and uncertainty, such as, the present times that we live. This thesis adds to the existing body of knowledge about firm value and the factors that influence it. The present work aims to assess whether the use of derivatives positively affects the firm value of Portuguese listed companies and to explain the evolution of risk management techniques across the years. In addition to the use (or not) of derivatives, other types of related variables must be considered as they may impact the company's value. These variables concern the total assets of the company, as well as the fixed assets/total assets, their net debt, the age of the companies, and the industry of the company. To fulfill the objective, a linear regression is estimated, and the result of the regression is analyzed in order to verify the relation between firm value and the use of derivatives as well as the partial effect of each control variable in the model. An OLS model is used for this, considering the data under study. This OLS model allows for explaining correlations in the data. It is concluded that the use of meaning is significant for the value of the company, as well as its age and the value of its net debt.

Date of Award	17 Jul 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Cunha (Supervisor)