Post by Sapphire Capital on Jan 28, 2009 9:07:32 GMT 4
Exchange Rate Hedging with Foreign Debt in the Spanish Market
Luis Otero González
Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies
Milagros Vivel Búa
Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies
Sara Fernandez Lopez
Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies
Pablo Duran Santomil
October 25, 2008
Abstract:
This paper analyzes the factors determining transactional exchange rate hedging with foreign currency debt for a sample of 56 Spanish non-financial companies listed in 2004. In particular, we analyze the variables that determine the decision to hedge with foreign currency debt as well as hedging volume. We also analyze the interaction between the foreign currency debt and derivatives in the hedging decision. Unlike previous empirical studies, which have attempted to explain the use of foreign currency debt through arguments exclusively stemming from optimal hedging theory, we have complemented the analysis with hypothesis from capital structure theory.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1289562_code647379.pdf?abstractid=1289562&mirid=1
Luis Otero González
Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies
Milagros Vivel Búa
Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies
Sara Fernandez Lopez
Universidade de Santiago de Compostela - Faculty of Economic Science and Business Studies
Pablo Duran Santomil
October 25, 2008
Abstract:
This paper analyzes the factors determining transactional exchange rate hedging with foreign currency debt for a sample of 56 Spanish non-financial companies listed in 2004. In particular, we analyze the variables that determine the decision to hedge with foreign currency debt as well as hedging volume. We also analyze the interaction between the foreign currency debt and derivatives in the hedging decision. Unlike previous empirical studies, which have attempted to explain the use of foreign currency debt through arguments exclusively stemming from optimal hedging theory, we have complemented the analysis with hypothesis from capital structure theory.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1289562_code647379.pdf?abstractid=1289562&mirid=1