| dc.description.abstract | The main purpose of this thesis is to examine whether firms’ engagement in hedging activities
is rewarded in terms of higher firm value. In the process of answering this question we have
also conducted two additional analyses. The first one indicates common characteristics of
firms that hedge while the second seek to answer whether hedging reduce the exposure to
currency fluctuations.
According to our results there is no sign that hedging is rewarded by investors. In fact, we find
that hedging firms are valued at a lower market value to book value ratio. Our second analysis
indicates that large firms hedge more than small, and that those with a high share of foreign
revenue are more likely to hedge. Furthermore, firms with more large owners (above 5%
stake) are less likely to hedge. Finally, our third analysis shows the effectiveness of hedging
derivatives as users of these are less exposed to fluctuations in foreign exchange rates. | en |
