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The Determinants of Hedging with Currency Derivatives: A quantitative study on the Swedish OMX Exchange
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
2010 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Most firms are actively assessing the financial risks exposure and do determine a policy for the hedging activities. It is not solely the risk aversive attitude from the managers that need to be overlooked, but to provide sufficient information to the shareholder is desirable for minimizing the gap of information asymmetry, which is by itself considered a tool for value creation (Bergstrand et al. 2009:45-47). To narrow this gap, listed Swedish companies have since 2005 been required to disclose their financial risk in their Annual Reports.  By using a quantitative approach the researcher will review the financial risk note in Annual Reports of 2008 to identify characteristics and determinant variables on firms depending on whether they utilize currency derivatives or not.

An independent two-sample t-test has showed statistical significance that there difference of the means regarding size, FX exposure and leverage between users and non-users of currency derivatives. The means of currency derivatives users were higher for Size and FX exposure, while lower for leverage. A positive correlation between a firm’s size and FX exposure was found, suggesting that the determinant for hedging FX exposure could be explained by the size of the firm and vice versa.

Place, publisher, year, edition, pages
2010. , 72 p.
Keyword [en]
hedging, derivatives, currency risk, exposure, fx, financial risk
National Category
Business Administration
Identifiers
URN: urn:nbn:se:umu:diva-119809OAI: oai:DiVA.org:umu-119809DiVA: diva2:924261
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Available from: 2016-04-28 Created: 2016-04-28 Last updated: 2016-04-28Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf