Firm Complexity and FX Derivatives Use

26 Pages Posted: 11 Mar 2002

See all articles by Walter Dolde

Walter Dolde

University of Connecticut - Department of Finance

Dev R. Mishra

University of Saskatchewan - Edwards School of Business

Date Written: February 27, 2002

Abstract

Based on information considerations, we develop and test hypotheses that more complex firms are more likely to manage FX exposures rather than leaving hedging to stockholders. Our data set comprises all US firms with sales exceeding $1 billion. We specify and test proxies for firm complexity, controlling for FX exposure. Both the decision about whether to use FX derivatives and the decision on extent of use are significantly related to firm complexity.

Keywords: Corporate hedging, foreign exchange derivatives, information

JEL Classification: F31, G30

Suggested Citation

Dolde, Walter and Mishra, Dev R., Firm Complexity and FX Derivatives Use (February 27, 2002). Available at SSRN: https://ssrn.com/abstract=302813 or http://dx.doi.org/10.2139/ssrn.302813

Walter Dolde (Contact Author)

University of Connecticut - Department of Finance ( email )

School of Business
One Univesity Place
Stamford, CT 06901-2315
United States
203-301-0806 (Phone)

Dev R. Mishra

University of Saskatchewan - Edwards School of Business ( email )

Edwards School of Business
Saskatoon, Saskatchewan S7N 5A7
Canada
306-966-8457 (Phone)
306-966-2515 (Fax)

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