Managers’ Research Education, the Use of FX Derivatives and Corporate Speculation

53 Pages Posted: 9 Sep 2017  

Oliver Entrop

University of Passau

Matthias Merkel

University of Passau

Date Written: September 2017

Abstract

In contrast to the U.S., many executive managers of continental European firms have a PhD. In this paper we analyze if a research-oriented background in the form of a PhD is linked to the corporate decision-making of CFOs in the use of foreign exchange (FX) derivatives in Germany. After controlling for fundamental firm characteristics, compensation schemes and personal characteristics of managers, we find some evidence that CFOs with a PhD in a business-related area tend to use FX derivatives less, while CFOs with a general business education do so more. Analyzing their behavior with regard to speculation, we find strong evidence that CFOs with a PhD speculate less on the FX market compared to CFOs with another (business) education. A possible reason may be that a research-oriented education is more associated with critical awareness and long-term orientation in corporate decision-making.

Keywords: FX Derivatives, Risk Management, Speculation, Behavioral Corporate Finance, PhD, Doctorate

JEL Classification: G30, G32, F31

Suggested Citation

Entrop, Oliver and Merkel, Matthias, Managers’ Research Education, the Use of FX Derivatives and Corporate Speculation (September 2017). Available at SSRN: https://ssrn.com/abstract=3032991 or http://dx.doi.org/10.2139/ssrn.3032991

Oliver Entrop (Contact Author)

University of Passau ( email )

Innstrasse 27
Passau, 94032
Germany
+49 851 509 2460 (Phone)
+49 851 509 2462 (Fax)

Matthias Merkel

University of Passau

Innstrasse 27
Passau, 94032
Germany

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