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DETERMINANTS OF EXCHANGE RATE HEDGING: AN EMPIRICAL ANALYSIS OF U.S. SMALL-CAP INDUSTRIAL FIRMS

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Date Issued:
2011
Abstract/Description:
Using a sample of 141 U.S. small-cap industrial firms, I examine the firm characteristics that influence its use of foreign exchange derivatives to hedge exchange rate risk. Companies in the industrial sector produce goods and services that are used for the production of another final product. The performance of this sector is closely correlated to the level of demand from the final consumer. I find firm size, the amount of foreign sales, and firm liquidity influence the firm's decision to use foreign exchange derivatives to hedge exchange rate risk. For those firms that hedge exchange rate risk using derivatives, a second test examines the firm characteristics that influence the extent of its hedging activities. I find the extent of hedging is influenced by the amount of foreign sales, the amount of foreign assets, and the number of foreign subsidiaries the firm operates. A final test examines whether certain firm characteristics influence its decision to use options as part of its hedging operations. I find no evidence that the firm characteristics examined herein influence that decision.
Title: DETERMINANTS OF EXCHANGE RATE HEDGING: AN EMPIRICAL ANALYSIS OF U.S. SMALL-CAP INDUSTRIAL FIRMS.
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Name(s): Lehner, Zachary, Author
Gilkeson, James, Committee Chair
University of Central Florida, Degree Grantor
Type of Resource: text
Date Issued: 2011
Publisher: University of Central Florida
Language(s): English
Abstract/Description: Using a sample of 141 U.S. small-cap industrial firms, I examine the firm characteristics that influence its use of foreign exchange derivatives to hedge exchange rate risk. Companies in the industrial sector produce goods and services that are used for the production of another final product. The performance of this sector is closely correlated to the level of demand from the final consumer. I find firm size, the amount of foreign sales, and firm liquidity influence the firm's decision to use foreign exchange derivatives to hedge exchange rate risk. For those firms that hedge exchange rate risk using derivatives, a second test examines the firm characteristics that influence the extent of its hedging activities. I find the extent of hedging is influenced by the amount of foreign sales, the amount of foreign assets, and the number of foreign subsidiaries the firm operates. A final test examines whether certain firm characteristics influence its decision to use options as part of its hedging operations. I find no evidence that the firm characteristics examined herein influence that decision.
Identifier: CFH0003787 (IID), ucf:44762 (fedora)
Note(s): 2011-05-01
B.S.
Business Administration, Department of Finance
Masters
This record was generated from author submitted information.
Subject(s): Derivatives
Hedging
Exchange Rate
Exchange Rate Risk
Foreign Currency Risk
Currency Derivatives
Exchange Rate Hedging
Foreign Currency Hedging
Industrial
Small-Cap
Persistent Link to This Record: http://purl.flvc.org/ucf/fd/CFH0003787
Restrictions on Access: public
Host Institution: UCF

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