Abstract
Previous research has shown that firms identified as derivative users tend to be valued at a premium relative to non-users. In this paper I develop the hypothesis that the derivative premium' is higher in firms with centralised FX exposure management, compared to a decentralised approach in which subsidiaries retain bank contacts and/or decision-making authority. This study benefits from unique survey data on the FX management practices and derivative usage of Swedish listed firms. The data supports the centralisation-hypothesis. Firms with a centralised approach have a statistically significant derivative premium of around 15%, whereas there is no premium for decentralised firms.
| Original language | English |
|---|---|
| Pages (from-to) | 309-332 |
| Journal | European Financial Management |
| Volume | 21 |
| Issue number | 2 |
| Early online date | 2013 |
| DOIs | |
| Publication status | Published - 2015 |
Subject classification (UKÄ)
- Business Administration
Free keywords
- centralisation
- risk management
- currency risk
- derivative
- hedging