1 Finance Research Group, Aarhus School of Business, Aarhus BSS, Aarhus University2 Department of Management, Aarhus School of Business, Aarhus BSS, Aarhus University3 Department of Economics and Business Economics, Aarhus BSS, Aarhus University4 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
This empirical study of the exchange rate exposure management of Danish non-financial firms listed on the Copenhagen Stock Exchange shows that debt denominated in foreign currency ("foreign debt") is a very important alternative to the use of currency derivatives. The results show that the relative importance of foreign debt is positively related to (1) the extent of foreign subsidiaries, (2) the relative value of assets in place, (3) the size of the firm, and (4) the debt ratio. The pivotal role of time horizon is emphasized. These findings are important to firms in other countries with open economies.
Main Research Area:
European Financial Management Association 2005 Annual Conference