The impact of hedging on firm value: evidence from US multinational corporations
by Shuming Bai; Bina Sharma Parajuli; Christie Ryan
International Journal of Services and Standards (IJSS), Vol. 11, No. 4, 2016

Abstract: This paper examines whether hedging can affect multinationals' firm value. Employing pooled cross-sectional time-series analysis of manually collected data of US multinational corporations from 2008 to 2015, this manuscript finds that (i) hedging activities are positively related to the firm value of multinational companies as implied by firm value maximisation theories; (ii) hedging significantly increases firm value by above 10% over the full-sample and the post-crisis sub-sample periods; but (iii) hedging appears insignificant and irrelevant during the global financial crisis period, which may indicate that global economic conditions could dominate any firm-level hedging activity effect. This is a new finding that contributes to the current hedging literature.

Online publication date: Fri, 24-Feb-2017

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