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Ownership structure, hedging incentives and exchange rate exposure

Author

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  • Ekta Sikarwar
  • Ganesh Kumar Nidugala

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.

Suggested Citation

  • Ekta Sikarwar & Ganesh Kumar Nidugala, 2018. "Ownership structure, hedging incentives and exchange rate exposure," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 9(1), pages 52-72.
    • Handle: RePEc:ids:ijcgov:v:9:y:2018:i:1:p:52-72
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    Cited by:

    1. Mouna Aloui & Bassem Salhi & Anis Jarboui, 2019. "Market risk, corporate governance, and the regulation during the recent financial crisis," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 15(5), pages 700-718, May.

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