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Article: Operational and financial hedging for exporting firms

TitleOperational and financial hedging for exporting firms
Authors
Wong, KP
KeywordsExotic derivatives
Export flexibility
Production
Issue Date2007
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/iref
Citation
International Review Of Economics And Finance, 2007, v. 16 n. 4, p. 459-470 How to Cite?
DOI: http://dx.doi.org/10.1016/j.iref.2005.06.001
AbstractThis paper examines the interaction between operational and financial hedging in the context of an internationally competitive but domestically monopolistic firm under exchange rate uncertainty. Operational hedging is modeled by letting the firm make its export decision after it has observed the true realization of the then prevailing spot exchange rate. Financial hedging, on the other hand, is modeled by allowing the firm to trade fairly priced exotic derivatives that are tailor-made for the firm's hedging need. We show that both operational and financial hedging unambiguously entice the firm into producing more. We further derive sufficient conditions under which operational hedging dominates (is dominated by) financial hedging in terms of promoting the firm's optimal output. © 2005 Elsevier Inc. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/85560
ISSN
1059-0560
2021 Impact Factor: 3.399
2020 SCImago Journal Rankings: 0.781
References
References in Scopus

 

DC FieldValueLanguage
dc.contributor.authorWong, KPen_HK
dc.date.accessioned2010-09-06T09:06:35Z-
dc.date.available2010-09-06T09:06:35Z-
dc.date.issued2007en_HK
dc.identifier.citationInternational Review Of Economics And Finance, 2007, v. 16 n. 4, p. 459-470en_HK
dc.identifier.issn1059-0560en_HK
dc.identifier.urihttp://hdl.handle.net/10722/85560-
dc.description.abstractThis paper examines the interaction between operational and financial hedging in the context of an internationally competitive but domestically monopolistic firm under exchange rate uncertainty. Operational hedging is modeled by letting the firm make its export decision after it has observed the true realization of the then prevailing spot exchange rate. Financial hedging, on the other hand, is modeled by allowing the firm to trade fairly priced exotic derivatives that are tailor-made for the firm's hedging need. We show that both operational and financial hedging unambiguously entice the firm into producing more. We further derive sufficient conditions under which operational hedging dominates (is dominated by) financial hedging in terms of promoting the firm's optimal output. © 2005 Elsevier Inc. All rights reserved.en_HK
dc.languageengen_HK
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/irefen_HK
dc.relation.ispartofInternational Review of Economics and Financeen_HK
dc.rightsInternational Review of Economics & Finance. Copyright © Elsevier BV.en_HK
dc.rightsThis work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.-
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in <International Review of Economics and Finance>. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 16, ISSUE 4, (2007)] DOI 10.1016/j.iref.2005.06.001-
dc.subjectExotic derivativesen_HK
dc.subjectExport flexibilityen_HK
dc.subjectProductionen_HK
dc.titleOperational and financial hedging for exporting firmsen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=1059-0560&volume=16&spage=459&epage=470&date=2007&atitle=Operational+and+Financial+Hedging+for+Exporting+Firmsen_HK
dc.identifier.emailWong, KP: kpwongc@hkucc.hku.hken_HK
dc.identifier.authorityWong, KP=rp01112en_HK
dc.description.naturepostprint-
dc.identifier.doi10.1016/j.iref.2005.06.001en_HK
dc.identifier.scopuseid_2-s2.0-34548480190en_HK
dc.identifier.hkuros136517en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-34548480190&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume16en_HK
dc.identifier.issue4en_HK
dc.identifier.spage459en_HK
dc.identifier.epage470en_HK
dc.publisher.placeNetherlandsen_HK
dc.identifier.scopusauthoridWong, KP=7404759417en_HK
dc.identifier.issnl1059-0560-

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