earticle

영어

Companies operating in foreign countries can use financial hedging and operational hedging to manage serious losses in a sudden change of external environment. Financial hedging is the management of an uncertain external environment by using derivatives and operational hedging is exercising the flexibility of operations by using overseas subsidiary networks. As a result of the empirical analysis, financial hedging can reduce external uncertainty such as exchange rate fluctuation. Tobin's Q, which represents firm value, and hedging activity (financial hedging and operational hedging) show a negative relationship because hedging activity is recognized as a cost.