 Foreign currency risk hedging and firm value in ChinaRobin Hang Luo and Rui Wang Journal of Multinational Financial Management, 2018, vol. 47-48, 129-143 Abstract: The objective of our study is to investigate the association between the use of foreign currency derivatives and corporate value among Chinese firms by examining listed firms’ quarterly data from 2000 to 2013. We find that Chinese firms that engage in hedging activities with derivatives to reduce their foreign exchange exposure tend to have higher corporate value. This finding is shown to be consistent through a series of robustness tests. We also find that the incidence of such effects is higher among firms with greater profitability and investment opportunities. The use of foreign currency derivatives exerts a more prominent impact on firm value when the exchange rate depreciates and when the economy is booming. However, the link between derivative use and firm value is weaker during crisis periods. Moreover, an industrial analysis demonstrates that the value-enhancing effect varies across industries. Keywords: Derivatives; Exchange rate; Firm value; Hedging; Value-enhancing effect; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:47-48:y:2018:i::p:129-143 DOI: 10.1016/j.mulfin.2018.11.002 Access Statistics for this article Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth More articles in Journal of Multinational Financial Management from Elsevier |
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