[image: Description: > http://usera.ImageCave.com/padhua/BSchool_logo.jpg] > > *24, Kothari Road, Nungambakkam,* > *Chennai 600 034 > * > > > > > > > > > > > > > > *Date* > *15th December, 2011* > ** > > *Time* > > *3.00 pm* > > *Venue*** > * > > Kerala Conference Room > 10th Floor, Phase 1 > IIT Madras Research park, > No.1 Kanagam, > > Chennai-600113. > *** > > > > INSTITUTE FOR FINANCIAL MANAGEMENT AND RESEARCH (IFMR) > > *cordially invites you for a * > > *seminar on* > * * > *"Corporate Use of Currency Derivatives: An Empirical Study of > Non-financial Firms."* > > *by > > **Mr. Praveen Bhagawan. M.* > > *IFMR > * > > *Abstract* > > > > . Since the last decade, Indian firms have been using substantial > amount of foreign currency derivatives to hedge their foreign currency > risk. We examine the usage of currency derivatives by non-financial > constituents of S&P CNX 500 for the year 2009. Among firms with > disclosure on currency derivatives, 84.09% of the sample firms go for > hedging and the remaining 15.91% of the sample firms do not hedge their > foreign exchange exposure. Out of classified hedgers, 18.97% of the sample > firms prefer complete hedging and the remaining 81.03% of the sample firms > go for selective hedging. We find that for managing currency risk, > forwards and futures are the main instrument followed by options and swaps. > We observe that corporates use currency derivatives to hedge mainly for > receivables followed by long term loans and payables. We examine what > determines a firm’s decision to hedge, extent of hedging and also extent of > hedging among hedgers. The probability of hedging is positively related > to foreign exchange exposure and leverage ratio; and negatively to > liquidity and investment opportunities. The extent of hedging is negatively > related to liquidity, profitability and investment opportunities; and > positively related to foreign exchange exposure. Our result supports > financial distress cost hypothesis. > > >
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