EconPapers    
Economics at your fingertips  
 

Foreign exchange derivative use and firm value: Evidence from German non-financial firms

Matthias F. Merkel

No B-33-18, Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe from University of Passau, Faculty of Business and Economics

Abstract: In this paper I investigate whether the use of foreign exchange (FX) derivatives adds value to German firms, which together make up one of the major export economies in the world. I analyze a unique, hand-collected dataset that includes information on the use of FX derivatives by 391 firms between 2004 and 2013. After controlling for a set of fundamental firm characteristics I find that on average the use of FX derivatives does significantly add to their value. This relationship seems to be mainly driven by firms with low values, suggesting that such firms can increase their value by using these instruments. Analysis of the detailed information of my dataset shows that besides the simple decision to use derivatives, the intensity of firms' use of them is also positively linked to firm value. My results show that especially firms with high values can further increase their firm value by increasing their FX derivative holdings.

Keywords: FX derivatives; hedging; Tobin's Q; firm value (search for similar items in EconPapers)
JEL-codes: F23 G15 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-sbm
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/179482/1/1023397943.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:upadbr:b3318

Access Statistics for this paper

More papers in Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe from University of Passau, Faculty of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().

 
Page updated 2018-11-24
Handle: RePEc:zbw:upadbr:b3318