Abstract

http://ssrn.com/abstract=46983
 
 

References (33)



 
 

Citations (208)



 
 

Footnotes (17)



 


 



Why Firms Use Currency Derivatives


Christopher Geczy


University of Pennsylvania - The Wharton School, Finance Department

Bernadette A. Minton


Ohio State University (OSU) - Department of Finance

Catherine M. Schrand


University of Pennsylvania - Accounting Department

October 1996

WP No. 96-4

Abstract:     
We examine firms' use of currency derivatives in order to differentiate among existing theories of hedging behavior. Firms with greater growth opportunities and tighter financial constraints are more likely to use currency derivatives. This result suggests that firms might use derivatives to reduce cash flow variation that might otherwise preclude firms from investing in valuable growth opportunities. Firms with extensive foreign exchange-rate exposure and economies of scale in hedging activities are also more likely to use currency derivatives. Finally, the source of foreign exchange-rate exposure is an important factor in the choice among types of currency derivatives.

Number of Pages in PDF File: 51

JEL Classification: G10, G31, G15

working papers series


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Date posted: November 14, 1996  

Suggested Citation

Geczy, Christopher and Minton, Bernadette A. and Schrand, Catherine M., Why Firms Use Currency Derivatives (October 1996). WP No. 96-4. Available at SSRN: http://ssrn.com/abstract=46983 or http://dx.doi.org/10.2139/ssrn.46983

Contact Information

Christopher Charles Geczy (Contact Author)
University of Pennsylvania - The Wharton School, Finance Department ( email )
The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
(215) 898-1698 (Phone)
(215) 898-6200 (Fax)
Bernadette A. Minton
Ohio State University (OSU) - Department of Finance ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-688-3125 (Phone)
614-292-2359 (Fax)

Catherine M. Schrand
University of Pennsylvania - Accounting Department ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-6798 (Phone)
215-573-2054 (Fax)

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References:  33
Citations:  208
Footnotes:  17

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