2015 Conference
October 15–16, 2015
Orlando, FL
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When Actions Speak Louder than Words: Currency Management in Non-Financial Corporations
Keywords: 5 words maximum
currency risk management, derivatives, hedging
Very short description for use in the program to help attendees understand more than a title can describe
Using a unique data set with complete firm-level components of currency positions, we examine whether large multinational non-financial firms are speculating or hedging as they manage their currency spot and derivatives positions. We find a notable discord between the stated policies of companies and their actions. We also find that the transactions they undertake are associated with market shock variables. Overall, the evidence strongly suggests that these non-financial firms are speculating instead of hedging when they manage their currency spot and derivatives positions. Moreover, we find that even when they are hedging, they are still attempting to time the market.
Lead & Corresponding Author
Dr. Sungjae Francis Kim, Gardner-Webb University
Job Title
Assistant Professor of Finance
Additional Authors
Dr. Don M Chance, Ph.D., Louisiana State University - Department of Finance
Job Title
Professor of Finance