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ResearchPaper
2017
On the determinants of speculation : a case for extended disclosures in corporate risk management
On the determinants of speculation : a case for extended disclosures in corporate risk management
Abstract (English)
We examine the determinants of corporate speculation and challenge the
extant, conflicting evidence. Separating risk management (reducing
currency-specific FX exposure) from speculation (increasing or holding
currency-specific FX exposure constant), we provide unprecedented
evidence that speculators are smaller, have more growth opportunities and
possess lower internal resources than risk-managing firms. The refined
granularity of our dataset stems from a unique regulatory environment,
where a regulating authority recommends additional disclosures for FX risk
management in excess of governing accounting standards. Our findings
enable investors, henceforth, to identify speculation from public available
sources, where our results substantiate the significance of such an extended
reporting. Thus, this case of optional disclosures might serve as blueprint
for further regulatory refinements in other settings.
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Publication series
Hohenheim discussion papers in business, economics and social sciences; 2017,15
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Faculty
Faculty of Business, Economics and Social Sciences
Institute
Institute of Financial Management
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Language
English
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Classification (DDC)
330 Economics