The role of managerial characteristics in FX risk management: Who increases risk?

Andreas Hecht ()
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Andreas Hecht: University of Hohenheim

Review of Managerial Science, 2021, vol. 15, issue 8, No 8, 2377-2406

Abstract: Abstract We examine the impact of managerial characteristics on the choice of risk-decreasing and risk-increasing/-constant strategies. Using unique data on firm-, year-, and currency-specific FX exposure before and after hedging with corresponding hedging instruments, we are able to measure how much a CEO has been involved in risk-increasing/-constant strategies over several years. We provide evidence that firms where the CEO has an MBA degree and is older are more likely to engage in risk-increasing/-constant strategies. In addition, we find that a CEO’s affiliation to the owner’s family seems to reduce the amount of derivatives a firms uses, while hedging short tends to increase derivative volumes.

Keywords: Foreign exchange; Derivatives; Risk management; Speculation; Managerial characteristics (search for similar items in EconPapers)
JEL-codes: G30 G32 G39 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11846-020-00432-x

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