Exchange Rate Risk and Corporate Hedging: Evidence from Turkey

Goknur Buyukkara, Mehmet Baha Karan, Huseyin Temiz, Yilmaz Yildiz

Research output: Contribution to journalArticle

Abstract

The aim of this study is to investigate the effect of exchange rate risk on corporate hedging in Turkey. Our panel logit analysis for the period 2009–2015 favors the financial distress hypothesis of hedging rather than the agency cost or investment opportunities hypotheses. The US dollar exchange rate affects the likelihood of currency risk hedging more than the conventional firm-specific determinants of corporate hedging especially after the Fed tapering period. Our findings reveal that, as the dollar exchange rate rises, firms increase their hedging activity since they carry considerable amount of debt in dollars, particularly aftermath of the global financial crisis.

LanguageEnglish
Pages1737-1753
Number of pages17
JournalEmerging Markets Finance and Trade
Volume55
Issue number8
Early online date4 Oct 2018
DOIs
Publication statusPublished - 21 Jun 2019
Externally publishedYes

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Corporate hedging
Exchange rate risk
Turkey
Hedging
Exchange rates
Agency costs
Currency risk
Logit analysis
Financial distress
Global financial crisis
Debt
Investment opportunities

Cite this

Buyukkara, Goknur ; Baha Karan, Mehmet ; Temiz, Huseyin ; Yildiz, Yilmaz. / Exchange Rate Risk and Corporate Hedging : Evidence from Turkey. In: Emerging Markets Finance and Trade. 2019 ; Vol. 55, No. 8. pp. 1737-1753.
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Exchange Rate Risk and Corporate Hedging : Evidence from Turkey. / Buyukkara, Goknur; Baha Karan, Mehmet; Temiz, Huseyin; Yildiz, Yilmaz.

In: Emerging Markets Finance and Trade, Vol. 55, No. 8, 21.06.2019, p. 1737-1753.

Research output: Contribution to journalArticle

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