Operational Hedges and the Foreign Exchange Exposure of U.S. Multinational Corporations
Oklahoma State University Working Paper
30 Pages Posted: 11 Dec 2000
Date Written: October 2000
Abstract
This paper examines the impact of operational hedges of US multinational corporations (MNCs) on their exchange rate exposure. The two important contributions of this study are as follows. First, this study documents the importance of operational hedges as significant determinants of exchange rate risk as measured by "breadth" and "depth" dimensions of the MNC foreign subsidiary network. Second, this finding remains robust even after examining the impact of operational hedges on exposure separately for net exporting and net importing MNCs.
Keywords: operational hedges, exchange rate risk, risk management, derivatives
JEL Classification: F23, F31
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Risk Management: Coordinating Corporate Investment and Financing Policies
By Kenneth Froot, David S. Scharfstein, ...
-
Why Firms Use Currency Derivatives
By Christopher Geczy, Bernadette A. Minton, ...
-
The Use of Foreign Currency Derivatives and Firm Market Value
By George Allayannis and James Weston
-
Exchange Rate Exposure, Hedging, and the Use of Foreign Currency Derivatives
By George Allayannis and Eli Ofek
-
Do Firms Hedge in Response to Tax Incentives?
By John R. Graham and Daniel A. Rogers
-
How Much Do Firms Hedge with Derivatives?
By Wayne R. Guay and S.p. Kothari
-
How Much Do Firms Hedge with Derivatives?
By Wayne R. Guay and S.p. Kothari
-
By John M. Griffin and René M. Stulz