Foreign exchange exposure and hedging strategies of Italian listed industrial compagnie
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Abstract
The paper analyzes foreign exchange risk hedging strategies using a sample of Italian industrial listed companies. Collecting data from both annual reports and financial data providers, we compare operating and financial hedging strategies over the period 2007-2012. The number and the concentration of foreign subsidiaries are used as a proxy for operational hedging, while currency derivatives are used as a proxy for financial hedging. After controlling for the sign and the magnitude of foreign exchange risk exposure, we find that financial strategies mitigate exchange risk.
Keywords
- Foreign exchange exposure
- operational hedging
- foreign currency derivatives
- multinational firms
