Currency hedging at the corporate level adds shareholder value Financial Essay
During the crisis, the effect of low levels of corruption is on. ownership of a controlling shareholder over the valuation of companies. Hedging foreign currencies on the value of companies. Nestle, Disney, Nokia and BP are the four multinational companies we will discuss in this report that examine currency risk hedging in annual reports. Nestle was founded, its headquarters were located in Vevey, Switzerland. Both in terms of sales and recognition, they are all among the largest food companies in the world. One study, by Hutson and Stevenson in 2010, argues that a country's governance environment provides managers with incentives to increase shareholder value through hedging. The authors analyze the impact of country-level governance on companies' exchange rate exposure and conclude that companies in countries with strong creditor rights secondarily recognize that the use of derivatives is only part of a broader financial strategy that takes into account with the type and level of financial risks, the availability of risk management tools and the operating environment of the company. In derivatives, companies use pass-through, operational hedging and foreign currency debt. Capital structure theory Miller suggested that in the perfect market hedging decisions should not add value to the firm. In the perfect stock market, shareholders have access to. First, we use the accumulated evidence from previous research to draw statistical conclusions about the value relevance of corporate hedging for non-financial firms. the work relates to Arnold, Rathgeber and Stckl 2014, who use a meta-analysis to clarify the determinants of corporate hedging. We apply these methods to, furthermore, Kim et al. 2006 and Hutson and Laing 2014 showed that firms operationally hedged through foreign sales used less financial derivatives compared to non-operationally hedged firms..