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Information, unternehmensinterne Kommunikation und Risikopolitik

Information, intra-firm communication and risk policy

Udo Broll, Bernard Gilroy and Jack E. Wahl

MPRA Paper from University Library of Munich, Germany

Abstract: Based upon the foundations of mean-variance decision-making theory, we demonstrate that a change in the risk situation of an international enterprise open currency position does not inevitably require a corresponding hedging accommodation. Given a new risk situation, whether a revision of the hedging-strategy is appropriate will depend upon the elasticity of risk aversion. The elasticity of risk aversion is a decisive indicator; however, it is rarely scrutinized in the literature. In addition, our analysis illustrates the cost saving advantages of the applied (μ,σ)-principal compared to the Bernoulli-principal for information procurement processes. Applying the (μ,σ)-principal facilitates and enhances firm-internal communication information levels.

Keywords: Exchange rate risk; international trade; hedging; information (search for similar items in EconPapers)
JEL-codes: D51 D8 F31 F33 (search for similar items in EconPapers)
Date: 2003
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