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Post by Sapphire Capital on Aug 14, 2008 21:30:19 GMT 4
Foreign Currency Hedging and Firm Value: A Dynamic Panel Approach Shane Magee Macquarie University - Applied Finance Centre August 5, 2008 Abstract: I reinvestigate the effect of foreign currency hedging on firm value. Consistent with prior research, my initial analysis suggests foreign currency hedging is associated with an increase in firm value. However, this analysis ignores the possibility that firm value may affect foreign currency hedging. I find foreign currency hedging depends on past amounts of firm value, and after controlling for this feedback effect, foreign currency hedging no longer affects firm value. This paper highlights the importance of controlling for the possibility of feedback from past amounts of firm value to the current amount of hedging when examining the effect of hedging on firm value. papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1202802_code592892.pdf?abstractid=1150471&mirid=3
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