Does the use of foreign currency derivatives affect firms' market value? Evidence from Colombia

José Gómez-González; C. León; Karen Leiton Rodríguez

doi:10.2753/REE1540-496X480403

Does the use of foreign currency derivatives affect firms' market value? Evidence from Colombia

José Gómez-González^*
, C. León
, Karen Leiton Rodríguez

^*Corresponding author for this work

Research output: Contribution to journal › Article › Scientific › peer-review

18 Citations (Scopus)

Abstract

This study tests the effects of risk management and hedging decisions on firms' market value. Using information on Colombian nonfinancial firms and the locale's most liquid derivatives market, we find that for a panel of eighty-one large Colombian corporations the growth rate of Tobin's q depends significantly on a firm's size and hedging. Our results suggest that an increase in hedging leads to a higher growth in the firms' value.

Original language	English
Pages (from-to)	50-66
Journal	Emerging Markets Finance and Trade
Volume	48
Issue number	4
DOIs	https://doi.org/10.2753/REE1540-496X480403
Publication status	Published - 1 Jul 2012
Externally published	Yes

Keywords

emerging market
firm value
hedging
Modigliani-Miller
risk management
Tobin's q

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abstract = "This study tests the effects of risk management and hedging decisions on firms' market value. Using information on Colombian nonfinancial firms and the locale's most liquid derivatives market, we find that for a panel of eighty-one large Colombian corporations the growth rate of Tobin's q depends significantly on a firm's size and hedging. Our results suggest that an increase in hedging leads to a higher growth in the firms' value.",

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KW - hedging

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Does the use of foreign currency derivatives affect firms' market value? Evidence from Colombia

Abstract

Keywords

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