Effect Of Financial Derivatives Used

With the deepening of China's capital market development, the risks faced by China's enterprises are becoming increasingly complex. Financial derivatives as an important means of risk control, is being accepted by more and more enterprises. But as Warren ?Buffett foretold in 2003, this began in the U.S. and spread to the global financial crisis, the initiator is called the financial weapons of mass destruction, financial derivatives. The development of financial derivatives is due to the 1980s the spread of Western neo-liberalism. The rise of neo-liberalism greatly increased demand for the development of derivatives. At the same time, believe in neo-liberal World Bank, International Monetary Fund requires all trading nations to open their financial markets, and realizes financial liberalization and globalization. Many companies and even some real industrial giants of international companies suffered bankruptcies because the use of financial derivatives and the improper operation. Of course, China's state enterprises are not immune. In this financial crisis, the international market commodity, energy and raw material prices fell sharply, all the major currencies, interest rate fluctuations intense, some of China's enterprises, especially a number of central enterprises as the use of financial derivatives suffered great economic losses. Therefore, the using of financial derivatives on whether to impose the interests becoming one of management focuses.Effect on the use of financial derivatives, although the research literature-rich, but did not form the same conclusions. The inherent relationship between company's value and cash flow, cash flow and financial risk are derived from the theory of corporate governance, risk control theory, separately. And thus determine the effect of cash flow-control perspective for the study. At the same time, the company's property would be heterogeneity. This has an impact on the value of risk control and other aspects. And the effect of the use of financial derivatives is also due to the heterogeneity of corporate property rights, there is currently little research in this area. PSM model can overcome the non-experimental sample endogenous, the results of the analysis is more objective. Taking into account the use of derivatives and cash flow and cash flow and value of the company as the two-stage theory, and the logic of convergence of the model, this regression model variables and samples need some special treatment.Through the PSM model, the regression model of empirical studies have found that businesses can use derivatives to reduce cash flow volatility, and enhance cash flow stability, and thus enhance the company's value and performance. The number of firms using of financial derivatives in China, increasing in recent years although not affected by the global financial crisis, but the use of derivatives to reduce cash flow volatility effect in fact affected. State-owned, non-state enterprises have been hit to varying degrees.And non-state-owned enterprises suffered because of its less intervention and regulation, the use of financial derivatives with more choice and autonomy, which, compared with the state-owned enterprises have better use of results. This paper argues that, because the business itself requires the use of financial derivatives is still very strong, and indeed its use of derivatives in cash flow through the path effects to enhance corporate value. Therefore, management should release administrative control, particularly for state-owned enterprises.