Managers’ research education, the use of FX derivatives and corporate speculation

Oliver Entrop () and Matthias F. Merkel ()
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Oliver Entrop: University of Passau
Matthias F. Merkel: University of Passau

Review of Managerial Science, 2020, vol. 14, issue 4, No 6, 869-901

Abstract: Abstract In contrast to the U.S., many executive managers of firms in German-speaking countries have a PhD. In this paper we analyze if a research-oriented background in the form of a PhD is linked to the corporate decision-making of CFOs in the use of foreign exchange (FX) derivatives in Germany. After controlling for fundamental firm characteristics, compensation schemes and personal characteristics of managers, we find some evidence that CFOs with a PhD in a business-related area tend to use FX derivatives less, while CFOs with a general business education do so more. Analyzing their behavior with regard to speculation, we find strong evidence that CFOs with a PhD speculate less on the FX market compared to CFOs with another (business) education. A possible reason may be that a research-oriented education is more associated with critical awareness and long-term orientation in corporate decision-making that persuades managers to avoid overconfident behavior.

Keywords: FX derivatives; Risk management; Speculation; Overconfidence; PhD; Doctorate (search for similar items in EconPapers)
JEL-codes: F31 G30 G32 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11846-018-0314-z

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