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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26842
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| Title: | Exchange Rate Exposure, Hedging, and the Use of Foreign Currency Derivatives |
| Authors: | Allayannis, George
Ofek, Eli |
| Keywords: | Risk management
Multinationals
Corporate policies
Foreign trade |
| Issue Date: | Jul-1997 |
| Series/Report no.: | FIN-98-002 |
| Abstract: | We examine whether firms use foreign currency derivatives for hedging or
for speculative purposes. Using the sample of all S&P 500
nonfinancial firms for 1993, we find strong evidence that firms use
foreign currency derivatives for hedging; the use of derivatives
significantly reduces the exchange-rate risk firms face. We also find
that the decision to use derivatives depends on exposure factors (i.e.
foreign sales and foreign trade) and on variables largely associated
with theories of optimal hedging (i.e., size and R&D expenditures),
and that the level of derivatives used depends only on a firm's exposure
through foreign sales and trade. |
| URI: | http://hdl.handle.net/2451/26842 |
| Appears in Collections: | Economics Working Papers
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