How do firms manage their foreign exchange exposure?

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dc.contributor.authorHecht, Andreas
dc.contributor.authorLampenius, Niklas
dc.date.accessioned2024-09-03T07:30:31Z
dc.date.available2024-09-03T07:30:31Z
dc.date.issued2023de
dc.description.abstractWe examine how firms manage their foreign exchange (FX) exposure using publicly reported data on FX exposure before and after hedging with corresponding hedging instruments. Based on calculated firm-, year-, and currency-specific hedge ratios, we find that about 80 (20) percent of FX firm exposure is managed using risk-decreasing (risk-increasing/risk-constant) strategies. Further, we find that prior hedging outcomes affect the management of current FX exposure, where the exposure is reduced and management adjusts the hedge ratio closer to its benchmark average hedge ratio following prior benchmark losses. When separately evaluating risk-decreasing and risk-increasing positions, we find that prior benchmark losses are only relevant for risk-increasing but not for risk-decreasing positions, i.e., hedging decisions are independent of prior benchmark losses if the intention is to reduce FX exposure.en
dc.identifier.urihttps://hohpublica.uni-hohenheim.de/handle/123456789/16214
dc.identifier.urihttps://doi.org/10.3390/jrfm16080359
dc.language.isoengde
dc.rights.licensecc_byde
dc.source1911-8074de
dc.sourceJournal of risk and financial management; Vol. 16, No. 8 (2023) 359de
dc.subjectForeign exchange
dc.subjectCorporate risk management
dc.subjectSelective hedging
dc.subjectSpeculation
dc.subject.ddc330
dc.titleHow do firms manage their foreign exchange exposure?en
dc.type.diniArticle
dcterms.bibliographicCitationJournal of risk and financial management, 16 (2023), 8, 359. https://doi.org/10.3390/jrfm16080359. ISSN: 1911-8074
dcterms.bibliographicCitation.issn1911-8074
dcterms.bibliographicCitation.issue8
dcterms.bibliographicCitation.journaltitleJournal of risk and financial management
dcterms.bibliographicCitation.volume16
local.export.bibtex@article{Hecht2023, url = {https://hohpublica.uni-hohenheim.de/handle/123456789/16214}, doi = {10.3390/jrfm16080359}, author = {Hecht, Andreas and Lampenius, Niklas}, title = {How Do Firms Manage Their Foreign Exchange Exposure?}, journal = {Journal of risk and financial management}, year = {2023}, volume = {16}, number = {8}, }
local.export.bibtexAuthorHecht, Andreas and Lampenius, Niklas
local.export.bibtexKeyHecht2023
local.export.bibtexType@article

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