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Article: Multinationals, hedging, and capital structure under exchange rate uncertainty

TitleMultinationals, hedging, and capital structure under exchange rate uncertainty
Authors
KeywordsCapital structure
Exchange rate uncertainty
Hedging
Multinationals
Issue Date2006
PublisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0923-7992
Citation
Open Economies Review, 2006, v. 17 n. 1, p. 103-114 How to Cite?
AbstractThis paper examines the interplay of the financing and hedging decisions of a risk-averse multinational firm having a wholly-owned foreign subsidiary. Exchange rate risk management of the multinational firm is shown to have direct impacts on its international capital structure decision and on its currency of denomination decision. If a currency forward market exists, the multinational firm will devise its international capital structure so as to minimize the global weighted average cost of capital. Or else the multinational firm has to rely on a money market hedge through issuing more foreign currency denominated debt and less domestic currency denominated debt, thereby resulting in a higher global weighted average cost of capital. © Springer Science + Business Media, Inc. 2006.
Persistent Identifierhttp://hdl.handle.net/10722/85640
ISSN
2015 Impact Factor: 0.772
2015 SCImago Journal Rankings: 0.531
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorBroll, Uen_HK
dc.contributor.authorWong, KPen_HK
dc.date.accessioned2010-09-06T09:07:29Z-
dc.date.available2010-09-06T09:07:29Z-
dc.date.issued2006en_HK
dc.identifier.citationOpen Economies Review, 2006, v. 17 n. 1, p. 103-114en_HK
dc.identifier.issn0923-7992en_HK
dc.identifier.urihttp://hdl.handle.net/10722/85640-
dc.description.abstractThis paper examines the interplay of the financing and hedging decisions of a risk-averse multinational firm having a wholly-owned foreign subsidiary. Exchange rate risk management of the multinational firm is shown to have direct impacts on its international capital structure decision and on its currency of denomination decision. If a currency forward market exists, the multinational firm will devise its international capital structure so as to minimize the global weighted average cost of capital. Or else the multinational firm has to rely on a money market hedge through issuing more foreign currency denominated debt and less domestic currency denominated debt, thereby resulting in a higher global weighted average cost of capital. © Springer Science + Business Media, Inc. 2006.en_HK
dc.languageengen_HK
dc.publisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0923-7992en_HK
dc.relation.ispartofOpen Economies Reviewen_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsThe original publication is available at www.springerlink.com-
dc.subjectCapital structureen_HK
dc.subjectExchange rate uncertaintyen_HK
dc.subjectHedgingen_HK
dc.subjectMultinationalsen_HK
dc.titleMultinationals, hedging, and capital structure under exchange rate uncertaintyen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0923-7992&volume=17&spage=103&epage=114&date=2006&atitle=Multinationals,+Hedging,+and+Capital+Structure+under+Exchange+Rate+Uncertaintyen_HK
dc.identifier.emailWong, KP: kpwongc@hkucc.hku.hken_HK
dc.identifier.authorityWong, KP=rp01112en_HK
dc.description.naturepostprint-
dc.identifier.doi10.1007/s11079-006-4744-xen_HK
dc.identifier.scopuseid_2-s2.0-32044435846en_HK
dc.identifier.hkuros123405en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-32044435846&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume17en_HK
dc.identifier.issue1en_HK
dc.identifier.spage103en_HK
dc.identifier.epage114en_HK
dc.identifier.isiWOS:000235062800005-
dc.publisher.placeUnited Statesen_HK
dc.identifier.scopusauthoridBroll, U=7004024398en_HK
dc.identifier.scopusauthoridWong, KP=7404759417en_HK
dc.identifier.citeulike495444-

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