Risk management activities for oil and gas producers and the impact on firm value

This thesis questions the hedging activities of oil and natural gas firms if it is successful for reducing financial risks. The performance of companies is proxied by Tobin's Q and panel regression models are built to estimate the coefficients for firm value and derivative use. The speculative use of derivatives is eliminated in models by the regulations under IFRS and GAAP. 76 companies from IHS Markit Database are deployed in the model. Based on the availability of disclosures, data period is covering 2007 to 2016. Data includes Global, European, Russian, Asian, Canadian and Other Integrated Companies as well as South & Central International Oil Companies, Large North American Exploration and Production (E&P) Companies, Canadian E&Ps and Trusts, Outside North America E&Ps. The results give critical information regarding asymmetric information and signalling effect. Since the coefficient of derivatives use is negative, it shows the critical meaning of disclosures on the financial healthiness. If companies are publishing high level of hedging activities, it might be a warning for investors to avoid investing at that company.