Managing Corporate FX Risk: A Value-Maximizing Approach

Tom Copeland and Maggie Copeland

Financial Management, 1999, vol. 28, issue 3

Abstract: This paper develops a new approach for evaluating FX management programs. It presents a value-maximizing strategy based on minimizing the probability of business disruption. It argues that such a policy is an appropriate objecting for a corporate FX hedging program and shows that minimization of the variance of the hedged cash flow is neither necessary no sufficient for an FX hedging program to be optimal.

Date: 1999
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