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A risky affair: Dual class and FX hedging

Author

Listed:
  • Sah, Nilesh B.
  • Banerjee, Anandi
  • Malm, James
  • More, Deepak G.

Abstract

We highlight the risk management activities of dual class firms by focusing on their use of foreign exchange (FX) derivatives. As opposed to single class firms, dual class firms engage in lower levels of FX hedging activities which may be driven by their long-term orientation and insulation from short-term market pressures. Furthermore, we document that these firms have a stronger reluctance to using futures contracts for FX hedging due to their preference for opacity and hesitancy to divert resources away from their long-term goals. Overall, we underscore the influence of a firm's share structure on its FX hedging decisions.

Suggested Citation

  • Sah, Nilesh B. & Banerjee, Anandi & Malm, James & More, Deepak G., 2022. "A risky affair: Dual class and FX hedging," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005316
    DOI: 10.1016/j.frl.2021.102580
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    More about this item

    Keywords

    Dual class; Risk management; Foreign exchange hedging;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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