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The effects of currency hedging on firm value using a threshold model

Year: 2026

Type: article

Abstract: This study has examined the effects of currency derivatives on firm value in China and explored the dynamics of firm performance whilst considering agency problems and information asymmetry. The sample comprises data from 316 listed firms in the manufacturing industry on the Shenzhen stock market and uses Tobin's Q as the measure of the firm's value. Currency derivatives usage does not show any effect in the static threshold model, while it exhibits a significant valuation effect with the estimation of the dynamic threshold model: in the lower regime (low leverage firms) the effect of currency derivatives is significant and positive, there is less of an effect in the higher regime (high leverage firms).

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2026.105323

Authors: Yidi Sun, Bruce Morley, Paolo Zeppini

Institutions: University of Manchester, University of Bath, Centre National de la Recherche Scientifique, Université Côte d'Azur, Groupe de Recherche en Droit, Économie, Gestion

Language: English

Topic: Risk Management in Financial Firms

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,930

OpenAlex ID: W7155220430

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Cites: 37

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