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Foreign-Exchange-Risk Management in German Non-Financial Corporations: An Empirical Analysis

In: Risk Management

Author

Listed:
  • Martin Glaum

    (University Giessen)

Abstract

The paper reports the results of an empirical study into the foreign-exchange-risk management of large German non-financial corporations. The firms’ managers were asked about the measurement of exchange risk, about their management strategies, and about organizational issues. The majority of the firms are concerned about managing transaction exposure. Most firms adopted a selective hedging strategy based on exchange-rate forecasts. Only a small minority of firms does not hedge foreign-exchange risk at all, and only few companies hedge their transaction exposure completely. The survey found a number of discrepancies between the positions of the academic literature and corporate practice. The most interesting finding, however, is the widespread use of exchange-rate forecasts and of exchange-risk management strategies based on forecasts (selective hedging).

Suggested Citation

  • Martin Glaum, 2005. "Foreign-Exchange-Risk Management in German Non-Financial Corporations: An Empirical Analysis," Springer Books, in: Michael Frenkel & Markus Rudolf & Ulrich Hommel (ed.), Risk Management, edition 0, pages 537-556, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-26993-9_27
    DOI: 10.1007/3-540-26993-2_27
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    Cited by:

    1. Kuzmina, Olga & Kuznetsova, Olga, 2018. "Operational and financial hedging: Evidence from export and import behavior," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 109-121.
    2. Zhao, Lima & Huchzermeier, Arnd, 2015. "Operations–finance interface models: A literature review and framework," European Journal of Operational Research, Elsevier, vol. 244(3), pages 905-917.

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