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Foreign Debt Usage in Non-Financial Firms: a Horse Race between Operating and Accounting Exposure Hedging

European financial management : the journal of the European Financial Management Association, 2015-06, Vol.21 (3), p.590-611 [Peer Reviewed Journal]

2013 John Wiley & Sons Ltd ;2015 John Wiley & Sons Ltd ;ISSN: 1354-7798 ;EISSN: 1468-036X ;DOI: 10.1111/j.1468-036X.2013.12032.x

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Title:
Foreign Debt Usage in Non-Financial Firms: a Horse Race between Operating and Accounting Exposure Hedging
Author: Aabo, Tom ; Hansen, Marianna Andryeyeva ; Muradoglu, Yaz Gulnur
Subjects: Accounting ; accounting exposure ; Business management ; Corporate finance ; Debt ; Denmark ; exchange rate exposure management ; External debt ; foreign assets ; foreign debt ; Foreign exchange ; Foreign investment ; foreign subsidiaries ; Hedging ; Information ; International ; Managers ; Studies
Is Part Of: European financial management : the journal of the European Financial Management Association, 2015-06, Vol.21 (3), p.590-611
Description: Previous studies show that foreign exchange exposure from international sales can be hedged by foreign debt. We go beyond the foreign sales measure by using a unique database with detailed exposure information on Danish non‐financial firms with international operations. Our results indicate that foreign debt is used to hedge foreign assets and subsidiaries (accounting exposure) as opposed to foreign sales (operating exposure). The paper adds to the literature on corporate hedging by highlighting the importance of accounting exposure in the hedging behavior of corporate managers and the perceived need to reduce risks due to currency mismatches between assets and liabilities.
Publisher: Oxford: Blackwell Publishing Ltd
Language: English
Identifier: ISSN: 1354-7798
EISSN: 1468-036X
DOI: 10.1111/j.1468-036X.2013.12032.x
Source: Alma/SFX Local Collection

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Foreign Debt Usage in Non-Financial Firms: a Horse Race between Operating and Accounting Exposure Hedging

2013 John Wiley & Sons Ltd ;2015 John Wiley & Sons Ltd ;ISSN: 1354-7798 ;EISSN: 1468-036X ;DOI: 10.1111/j.1468-036X.2013.12032.x

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