An Empirical Study of the Impact of Multinational Corporations' Use of Foreign Exchange Derivatives on Corporate Value Mediating-Role of Agency Cost
Abstract
Based on the perspective that hedging can reduce agency costs, this paper uses stata12 to empirically analyze the relationship between multinational companies whose overseas export revenue accounts for 10% of total operating income (Jorion, 1990; He & Ng, 1998) using foreign exchange derivatives to company value, collecting 2017 financial data from Shenzhen Stock Exchange and the Shanghai Stock Exchange A-share listed company. It turns out that multinational companies using foreign exchange derivatives can improve agency efficiency, reduce agency costs, and increase company value.
References
Allayannis G, Ihrig J, Weston J (2001) Exchange-Rate hedging: Financial versus Operational Strategies [J].American Economic, 1:391-395.
Clark E, A Judge (2009) “Foreign Currency Derivatives versus Foreign Currency Debt and the Hedging Premium â€ï¼ŒEuropean Financial Management,15:606 -642
Bartram SM, Brown GW, F Fehle (2003) International Evidence on Financial Derivatives Usage[R].Working paper.
Bartram SM (2008) “What Lies Beneath: Foreign Exchange Rate Exposure Hedging and Cash Flowsâ€ï¼ŒJournal of Banking and Finance 32,1508-1521.
Guo Fei (2012) Foreign Risk Hedge and Corporate Value-An Empirical Study Based on Chinese Multinational Corporations[J].Economic Research, (9):18-31.
LinYouzhi, Zhang Yafen (2007) The Relationship between Information Transparency and Business Performance [J].Accounting Research, (9):26-34.
Lang L, Stulz R (1994) Tobin’s, Corporate Diversification and Firm Performance [J]. Journal of Political Economy, 102:1248-1280.
Leland HE (1998) Agency costs, risk management, and capital structure [J]. The Journal of Finance, , 53(4): 1213-1243.
Zheng Junge (2014) the impact of internal control on corporate value-based on the intermediary effect of agency cost. Master's thesis. Southwestern University of Finance and Economics.
De Marzo，Peter M, Darrell Duffie (1995) “Corporate Incentives for Hedging and Hedge Accountingâ€ï¼ŒReview of Financial Studies8 (3):743-771.
Breeden，Douglas Viswanathan (1998) “Why do Firms Hedge? An Asymmetric Information Modelâ€ï¼ŒWorking Paper， Duke University.
Aziz A, Lookman (2004) does hedging increase firm value? Evidence from oil and gas producing firms, [R], Working paper.
Jensen MC, Meckling WH (1976) Theory of the firm: Managerial behavior, agency costs and ownership structure [J]. Journal of financial economics,3(4): 305-360
Sheng xuan (2015) Empirical research on the impact of multinational companies using foreign exchange derivatives on company value. Master's thesis. Beijing foreign language university.
Yu Liang (2013) Financing constraints, agency costs and incentive policy governance effects. PhD thesis. South China University of Technology.
Allayannis G, Ofek (2001) Exchange-Rate Exposure, Hedging, and the use of foreign currency Derivatives[J].Journal of International Money and Finance, 20:273-296.
Rozeff M (1982) Growth, beta and agency costs as determinants of dividend payout ratios [J]. Journal of Financial Research, 5(3):249-259, Fall.
Nain A (2004) The Strategic Motives for Corporate Risk Management[R] ，University of Michigan Working Paper．
Cater D, Rogers D, Simkins B (2003) Does Fuel Hedging Make Economic Sense? The Case of the US Airline Industry[R].Working paper .Ok lahoma State University.
Hoa Nguyen, Robert Faff (2007) Are Financial Derivatives Really Value Enhancing? Australian Evidence[R].School Working Paper, Dakin University.
