Abstract
Globalization has reduced capital market imperfections and barriers, and led to significant foreign competition in product-markets giving rise to economic exposure of firms. We show that the firms’ preference for currency swaps is determined by their economic exposure. Our theory suggests that currency swaps help global firms achieve long-term financing and financial risk management objectives. Using a sample of 320 global firms from the Fortune 500 firms, we test the hypothesis emerging from our theory that the higher the economic exposure of the firm, the greater the likelihood of the firm using currency swaps. The hypothesis is validated for the cashflow-based measure of economic exposure.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
