Extent of hedging in the US lodging industry

Determinants of Corporate Hedging Practices in Malaysia

“…Out of 427 firms, only 112 firms met our criteria of non-missing data on derivatives and other variables and therefore sufficient firm-year observations over the period, 2003 -2007. The five-year period choice is somewhat similar to earlier studies on derivatives in the developed countries (see e.g., Singh and Upneja, 2007;Allayannis and Weston, 2001). It is worth mentioning that our coverage is better than previous studies such as Linsley and Shrives (2006) who studied 79 UK firms listed within FTSE 100 in 2001 and Nguyen and Faff (2003) 77 Australian firms in 1999.…”

“…Second, notional amounts or gross value of derivatives has been to explain the amount of derivatives used by the firms in a linear regression framework (see e.g., Singh and Upneja, 2007;Fok et al, 1997). The main objective of this paper is to examine the determinants of foreign currency and interest rate derivatives for which second approach seems more appropriate.…”

Internationalization and exposure to foreign currency risk: An examination of lodging firms

“…Despite the lack of research interest on lodging firms and their exchange rate exposure, perhaps due to the small amount of visible exposure on lodging firms' financial statements (Singh and Upneja, 2007), past studies on firm internationalization allow for the formulation of some important hypotheses. The first hypothesis relates to the source of exposure.…”

“…Second, although internationalization is expected to introduce foreign currency risk through transaction and translation (Singh and Upneja, 2007), revenues generated from international markets reduce cash flow volatility at the corporate level through the diversification effect (Jang and Tang, 2009;Pantzalis et al, 2001). The effect, widely cited as "operational hedging" (Kim et al, 2006), is grounded in the concept that exposure to risk from respective currencies will be reduced by adding more currencies to a firm's revenue portfolio, given that the currencies do not have unity covariance.…”

“…Exchange rates are a noted source of risk for international firms (Singh and Upneja, 2007;Fladmoe-Lindquist and Jacque, 1995), and corporate decisions to internationalize are a complex function determined by weighting a number of potential benefits against potential risks (Jang and Tang, 2009). When domestic firms are already open to foreign currency risk, it cannot be assumed that internationalization will introduce new risks.…”