Equity-linked executive compensation, hedging and foreign exchange exposure: Australian evidence
Elaine Hutson and
Hue Hwa Au Yong
Australian Journal of Management, 2020, vol. 45, issue 1, 72-93
Using a sample of 268 Australian firms over the period 2009â€“2014, we examine the relation between the equity-linked compensation (shares and options) of Australian executives â€“ CEOs, CFOs and directors â€“ and firmsâ€™ foreign exchange hedging programmes. We find that the greater the number of shares held by CEOs, the higher its exposure to exchange rate movements. While this suggests that remuneration in the form of shares has a critical downside, we also find evidence for a more positive and important role in foreign exchange risk management for the share- and option-related incentives provided to CFOs. JEL Classification: G32, G15, F31
Keywords: Derivatives; executive compensation; foreign exchange exposure; hedging; options; shareholdings (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:45:y:2020:i:1:p:72-93
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