"Speculation" in non-financial companies in relation to exchange rate exposure management constitutes one of the contributing factors behind corporate (or more widespread) crises. Deviations from benchmark positions constitute speculation. An empirical study of Danish non-financial companies finds that the larger the company (ability) and the larger its relative sale on foreign markets (relevance), the more likely the company will be to benchmark its exchange rate exposures. However, at the same time the very same factors (size and foreign sale) lead to more extensive speculation. Financial solvency (value) does not seem to have a significant effect on the extent of benchmarking / speculation. Additional economic sector effects are only present in the case of speculation where companies in Materials tend to speculate more than other companies.
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2nd International Conference on Banking and Finance, 2002