The Introduction of the Euro and Derivative Use in French Firms

17 Pages Posted: 29 Jan 2007

See all articles by John Capstaff

John Capstaff

University of Strathclyde - Strathclyde Business School

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School

Julie Hutton

Glasgow City Marketing Bureau

Abstract

In January 1999 several European countries adopted a common currency, the "euro". This important economic event provided an opportunity to examine the determinants of risk management in an environment where exposure to foreign exchange (FX) risk was considerably reduced. For a sample of French firms we found the decline in the use of FX derivatives was greater for firms with substantial sales within the euro zone and less for firms in industries that still had significant imports from outside the euro zone. The focus on derivatives adds to existing research, as it is a more explicit indicator of a reduction in the resources devoted to hedging. The reduction in hedging was not in direct proportion to the reduction in FX exposure, implying that euro risk was hedged more intensely than French franc risk in the sample of French firms over the chosen years.

Suggested Citation

Capstaff, John and Marshall, Andrew P. and Hutton, Julie, The Introduction of the Euro and Derivative Use in French Firms. Journal of International Financial Management & Accounting, Vol. 18, No. 1, pp. 1-17, Spring 2007, Available at SSRN: https://ssrn.com/abstract=959736 or http://dx.doi.org/10.1111/j.1467-646X.2007.01005.x

John Capstaff

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
0141 5483890 (Phone)
0141 5523547 (Fax)

Andrew P. Marshall (Contact Author)

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 548 3894 (Phone)

Julie Hutton

Glasgow City Marketing Bureau ( email )

11 George Square
Glasgow
United Kingdom
+44 0 141 566 0805 (Phone)

HOME PAGE: http://www.seeglasgow.com/convention-bureau/ContactUs

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