The foreign exchange exposure management practices of finnish industrial firms

Antti Hakkarainen, Nathan Joseph, Eero Kasanen, Vesa Puttonen

Research output: Contribution to journalArticle

22 Citations (Scopus)

Abstract

This study employs questionnaire survey and financial accounting data to extend earlier empirical work on the foreign exchange (FX) exposure management practices of Finnish industrial firms. The paper concentrates on: (i) the form that FX corporate hedging policy takes; (ii) the control of FX procedures and trading; and, (iii) our respondents' perceptions about their ability to predict FX rate changes for hedging decisions. Our results indicate that the extent to which firms hedge FX exposure depends on the type of exposure and the form that FX hedging policy takes. Also, a significant number of the firms pursue FX hedging strategies on the expectation of attaining trading profits and this strategy appears to be accommodated within their FX policies. This feature is not explicitly demonstrated in previous studies. Finnish firms hedge a much higher proportion of both transaction and translation exposures compared to economic exposure. We partly attribute this emphasis to the requirements of the Finnish Accounting Act, which came into effect in 1993. The organisational, historical and financial settings of the firms also have significant impacts on exposure management practices. The overall implication of those results is that firms respond to changes in the financial, economic and regulatory environments in which they operate. © Blackwell Publishers Ltd. 1998.
Original languageEnglish
Pages (from-to)34-57
Number of pages24
JournalJournal of International Financial Management and Accounting
Volume9
Issue number1
DOIs
Publication statusPublished - Feb 1998
Externally publishedYes

Fingerprint Dive into the research topics of 'The foreign exchange exposure management practices of finnish industrial firms'. Together they form a unique fingerprint.

  • Cite this