The effect of foreign currency hedging on the probability of financial distress

Material TypeArticleLanguageEnglish
TitleThe effect of foreign currency hedging on the probability of financial distress Author(S)Shane Magee (Author)
Abstract  This paper investigates the effect of foreign currency hedging with derivatives on the probability of financial distress. I use structural default model to compute firms’ distance to default as a proxy for their probability of financial distress. Using an instrumental variables approach to control for endogenous hedging and leverage, I find that the extent of foreign currency hedging is associated with a lower probability of financial distress ...Paginationp 1107-1128
SubjectManagementDescriptorsFinance
Journal TitleAccounting & Finance  
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