Ownership structure, hedging incentives and exchange rate exposure
by Ekta Sikarwar; Ganesh Kumar Nidugala
International Journal of Corporate Governance (IJCG), Vol. 9, No. 1, 2018

Abstract: The study examines the impact of ownership structure on exchange rate exposure using a sample of 651 Indian firms over the period 2001 to 2013. The study finds that ownership structure, in which agency costs and monitoring problems are lower, is associated with a reduced level of exchange rate exposure. The evidence also reveals that currency derivative usage is associated with greater reduction in exchange rate exposure for firms that have lower agency and monitoring problems obtained from their ownership structure. This study has important implications for managers, shareholders and investors who are associated with assessing a firm's exposure to exchange rate risk.

Online publication date: Fri, 23-Mar-2018

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