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the explanatory power of the explanatory variable to the explained variable, it can observe the
explanatory power of individual explanatory variable against the explained variable.
it DEB it TIE it OM it DMS it OI it it D it it ( )
The dependent variable of multinomial logistic is of multiple categories (0, 1, 2, 3, 4 … …). In
this model, the dependent variables include the types of risks and types of hedging tools used
by the company during the period of the empirical study.
it DEB it TIE it OM it DMS it OI it it D it it ( )
In virtual integration model, Futures has significant positive correlation with only OI and all of
Options, Change and other hedging instruments have also significant positive correlation with
DEB, DMS and OI. In vertical integration model, Futures hedging activities are positive
correlated significantly with TIE, OM, OI. Besides, in correlation with Option and other hedging
tools, DEB, OM and OI are significantly positive but DMS is significantly negative. In addition,
with Change, DEB, OI and DMS are significantly correlated but only DMS is negative.
Table14. Two Business models Comparison
Products Futures Options Change Others
Model VI IDM VI IDM VI IDM VI IDM
DEB + + + + + +
TIE +
OM + + +
DMS + - + - + -
OI + + + + + + + +
GW
Suggestions
RD -
+ mean Positive correlation,- means Negative correlation
By the results associated with the domestic and foreign research shows that added incentive for
companies hedging activities associated with the trait of the company there are some, such as
the financial crisis, company size, Company can understand its characteristic can be used, as a
basis for hedging decisions. Taiwan IC industry in two business models, virtual consolidation
and vertical integration in hedging activities cause its Debt ratio and Company’s growth
investment opportunity, can be displayed as reference of the two models of risk aversion. In
vertical mode, also from the operating margin, operator stake as risk aversion reference,
research and development costs. This study is expected to deepen the understanding of
investors, governmental authorities, and policy makers regarding the relationship between
financial derivatives and business operations of enterprises to provide a basis for reference of
decision making.
Tenth Annual International Daejeon, South Korea P a g e | 74
Smart Sourcing Conference June 28-29, 2012