vol 24 no3, 2024

Accounting Hedge and its Impact on The Value of Insurance Companies On Amman Stock Exchange

Hits: 286

Accounting Hedge and its Impact on The Value of Insurance Companies

On Amman Stock Exchange

Abstract:

The study aims to demonstrate the impact of accounting hedge with its dimensions (hedging at fair value, cash flows, net foreign investments) on the insurance companies value, these companies are listed on Amman Stock Exchange, during the period from (2011-2021).  The study followed the analytical descriptive approach and the quantitative approach using the financial indicators in order to measure the accounting hedge. The importance of the study appears in showing the extent to which the insurance companies listed on Amman Stock Exchange use accounting hedge policies that aims at minimizing the caused financial risks by the instability of the investment operations of their funds and the impact of this on the value of those companies. One of the study's most important findings shows the positive impact which is statistically significant of hedging in fair value and cash flows, and a statistically significant negative impact of hedging with net foreign investment on the value of insurance companies included in the list of Amman Stock Exchange. Subsequently, the recommendation for the insurance companies to not practice accounting hedging need to apply effective hedging policies because of their great role in reducing the expected risks and their positive impact on their value. It called for insurance companies that practice accounting hedge to continuously measure the efficiency of risk management to enhance their levels of efficiency and achieve effective risk management. Also, the need to strengthen the way of how regulators of finance set up the required techniques in order to ensure that the application of prudential accounting in companies is efficiently in various sectors.

Keywords: accounting hedge, fair value hedge, cash flow hedge, net foreign investment hedge, company value

Download