Currency exposure, hedging policy and agency conflicts.

Summary This thesis studies the effect of exchange rate changes on firm value, the determinants of hedging policy, and the role of agency conflicts. The results show that the non-significance of the currency exposure is explained by hedging asymmetry. The level of currency hedging depends on the firm's economies of scale, financial distress risk, and export level. Our results also reveal that executive compensation in shares and options reduces the residual currency risk of hedging.