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Foreign Exchange Rate Derivatives and Firm Value

Kalms, Love LU ; Sterner, Maja LU and Sterner, Lisa LU (2023) IBUH19 20231
Department of Business Administration
Abstract
Using Tobin’s Q as an approximation of firm value, this paper aims to examine the effect of foreign exchange rate derivatives on firm value. Risk management is viewed by many as one of the most vital aspects of corporate- and business strategy. On the topic of risk, foreign exchange rate exposure is a distinctive form of risk confronted by numerous internationally operating firms. The mitigation of such risk is commonly pursued by trading various forms of currency derivatives. Therefore, how and if this category of derivatives succeed in providing value to the firm should be of notable interest to any international manager. To meet the objective of this research, a sample of 75 multinational, non-financial firms listed on Nasdaq Stockholm,... (More)
Using Tobin’s Q as an approximation of firm value, this paper aims to examine the effect of foreign exchange rate derivatives on firm value. Risk management is viewed by many as one of the most vital aspects of corporate- and business strategy. On the topic of risk, foreign exchange rate exposure is a distinctive form of risk confronted by numerous internationally operating firms. The mitigation of such risk is commonly pursued by trading various forms of currency derivatives. Therefore, how and if this category of derivatives succeed in providing value to the firm should be of notable interest to any international manager. To meet the objective of this research, a sample of 75 multinational, non-financial firms listed on Nasdaq Stockholm, with a market capitalization equal to or exceeding 1 billion SEK, was gathered. Results from multivariate regression analysis showed no significant relationship between the use of foreign exchange rate derivatives and firm value. Thus, obtained results indicate that large Swedish firms may not achieve an increase in firm value by the trade of foreign exchange rate derivatives. (Less)
Please use this url to cite or link to this publication:
author
Kalms, Love LU ; Sterner, Maja LU and Sterner, Lisa LU
supervisor
organization
alternative title
A quantitative study on the effect of exchange rate derivatives employed by firms listed on Nasdaq Stockholm
course
IBUH19 20231
year
type
M2 - Bachelor Degree
subject
keywords
derivative, hedging, exchange rate exposure, firm value, Tobin’s Q
language
English
id
9130554
date added to LUP
2023-09-12 13:27:33
date last changed
2023-09-12 13:27:33
@misc{9130554,
  abstract     = {{Using Tobin’s Q as an approximation of firm value, this paper aims to examine the effect of foreign exchange rate derivatives on firm value. Risk management is viewed by many as one of the most vital aspects of corporate- and business strategy. On the topic of risk, foreign exchange rate exposure is a distinctive form of risk confronted by numerous internationally operating firms. The mitigation of such risk is commonly pursued by trading various forms of currency derivatives. Therefore, how and if this category of derivatives succeed in providing value to the firm should be of notable interest to any international manager. To meet the objective of this research, a sample of 75 multinational, non-financial firms listed on Nasdaq Stockholm, with a market capitalization equal to or exceeding 1 billion SEK, was gathered. Results from multivariate regression analysis showed no significant relationship between the use of foreign exchange rate derivatives and firm value. Thus, obtained results indicate that large Swedish firms may not achieve an increase in firm value by the trade of foreign exchange rate derivatives.}},
  author       = {{Kalms, Love and Sterner, Maja and Sterner, Lisa}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Foreign Exchange Rate Derivatives and Firm Value}},
  year         = {{2023}},
}