The use of foreign currency derivatives and firm market value

• 成果类型: Article
• 署名作者: Allayannis, G; Weston, JP
• 署名单位: University of Virginia; Rice University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/14.1.243
• 发表日期: 2001
• 页码: 243
• 关键词: risk-management; corporate; diversification; determinants; COSTS

摘要

This article examines the use of foreign currency derivatives (FCDs) in a sample of 720 large U.S. nonfinancial firms between 1990 and 1995 and its potential impact on firm value. Using Tobin's Q as a proxy for firm value, we find a positive relation between firm value and the use of FCDs. The hedging premium is statistically and economically significant for firms with exposure to exchange rates and is on average 4.87% of firm value. We also find some evidence consistent with the hypothesis that hedging causes an increase in firm value.