Participants in derivatives markets are generally classified as hedgers and speculators. Hedgers use derivatives as their primary objective to protect against adverse changes, while speculators enter into a derivative contract to attempt to profit from anticipated changes in market prices. One of the biggest questions regarding the treatment of derivative instruments is whether they are actually used for hedging or speculation. (Adam and Fernando 2006)According to Guay (1999), companies can significantly reduce their risk through derivatives. But in the same research, he discovered that derivatives could be used to increase or decrease risk. Guay (1999) undertakes an empirical examination of new users of derivatives in an attempt to determine whether derivatives are used to reduce firm risk. The results show that companies use derivatives to hedge and not to speculate by increasing the company's risk. The survey is conducted among a sample of 254 non-financial companies that have started using derivatives and the results indicate that during this period, corporate risk has decreased by approximately...