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The management of foreign exchange risk by listed companies: an empirical study
This study explored the foreign exchange risk management practices by JSE-listed companies, specifically non-financial companies. The investigation was based on the experienced practices in 2015. A web-based survey was used to source data from the population and yielded a 37% response rate. Transact...
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| Format: | Thesis |
| Language: | English |
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Research of GSB
2017
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| _version_ | 1867613324810649600 |
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| access_status_str | Open Access |
| author | Mogaladi, George Tshegofatso |
| author2 | Gumede, Lungelo |
| author_browse | Gumede, Lungelo Mogaladi, George Tshegofatso |
| author_facet | Gumede, Lungelo Mogaladi, George Tshegofatso |
| author_sort | Mogaladi, George Tshegofatso |
| collection | Thesis |
| description | This study explored the foreign exchange risk management practices by JSE-listed companies, specifically non-financial companies. The investigation was based on the experienced practices in 2015. A web-based survey was used to source data from the population and yielded a 37% response rate. Transactional risk is the most prioritised form of foreign exchange exposure. Surprisingly, economic exposure is also highly regarded by JSE non-financial firms. Translational risk is the least prioritised form of foreign exchange risk. There is a significant statistical relationship between the frequency at which firms manage economic risk, and the industry to which they belong. Consistent with the prescriptive theory, the study found that a significant majority of firms used internal or operational hedging techniques in combination with financial derivatives. Netting is the predominately used internal hedging technique by the survey respondents. There is a significant relationship between a firm's usage of netting as an internal hedging technique and the percentage of foreign currency denominated expenses. Forward contracts are the preferred financial derivative used to hedge foreign exchange exposure. The study reveals that the manner in which firms use forward contracts is significantly influenced by their percentage of foreign currency denominated expenses. It is noted that a strategic decision with respect to management of foreign exchange risk in JSE non-financial firms falls within the purview of a firm's executive management. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/25392 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:34:20.437Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2017 |
| publishDateRange | 2017 |
| publishDateSort | 2017 |
| publisher | Research of GSB |
| publisherStr | Research of GSB |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/25392 The management of foreign exchange risk by listed companies: an empirical study Mogaladi, George Tshegofatso Gumede, Lungelo Development Finance This study explored the foreign exchange risk management practices by JSE-listed companies, specifically non-financial companies. The investigation was based on the experienced practices in 2015. A web-based survey was used to source data from the population and yielded a 37% response rate. Transactional risk is the most prioritised form of foreign exchange exposure. Surprisingly, economic exposure is also highly regarded by JSE non-financial firms. Translational risk is the least prioritised form of foreign exchange risk. There is a significant statistical relationship between the frequency at which firms manage economic risk, and the industry to which they belong. Consistent with the prescriptive theory, the study found that a significant majority of firms used internal or operational hedging techniques in combination with financial derivatives. Netting is the predominately used internal hedging technique by the survey respondents. There is a significant relationship between a firm's usage of netting as an internal hedging technique and the percentage of foreign currency denominated expenses. Forward contracts are the preferred financial derivative used to hedge foreign exchange exposure. The study reveals that the manner in which firms use forward contracts is significantly influenced by their percentage of foreign currency denominated expenses. It is noted that a strategic decision with respect to management of foreign exchange risk in JSE non-financial firms falls within the purview of a firm's executive management. 2017-09-26T14:51:49Z 2017-09-26T14:51:49Z 2017 Master Thesis Masters MCom http://hdl.handle.net/11427/25392 eng application/pdf Research of GSB Faculty of Commerce University of Cape Town |
| spellingShingle | Development Finance Mogaladi, George Tshegofatso The management of foreign exchange risk by listed companies: an empirical study |
| thesis_degree_str | Master's |
| title | The management of foreign exchange risk by listed companies: an empirical study |
| title_full | The management of foreign exchange risk by listed companies: an empirical study |
| title_fullStr | The management of foreign exchange risk by listed companies: an empirical study |
| title_full_unstemmed | The management of foreign exchange risk by listed companies: an empirical study |
| title_short | The management of foreign exchange risk by listed companies: an empirical study |
| title_sort | management of foreign exchange risk by listed companies an empirical study |
| topic | Development Finance |
| url | http://hdl.handle.net/11427/25392 |
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