1 Department of Business Studies, Aarhus School of Business, Aarhus BSS, Aarhus University2 Finance Research Group, Aarhus School of Business, Aarhus BSS, Aarhus University3 Department of Economics and Business Economics, Aarhus BSS, Aarhus University4 A.P. Møller - Maersk A/S5 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
The Role of Import in Medium-Sized, Manufacturing Firms
Empirical research has focused on export as a proxy for the exchange rate exposure and the use of foreign exchange derivatives as the instrument to deal with this exposure. This empirical study applies an integrated foreign exchange risk management approach with a particular focus on the role of import in medium-sized, manufacturing firms in Denmark (a small, open economy). We find a strong, negative relation between import and foreign exchange derivatives usage on the aggregate level. Our findings are consistent with the notion that firms use import to match the foreign exchange exposure created by foreign sales activities.