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2013/3 (Vol. 34)

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Pages 7 - 30 Next



The paper examines cross-border takeovers using the lens of currency risk management. With a sample of 152 large, cross-border deals undertaken by listed French firms, the findings reveal that acquirers tend to be firms with greater exposure to the target currency prior to the takeover announcement. The value of the acquiring firm becomes less sensitive to the target currency after the transaction. Acquirer abnormal returns also are positively associated with a decrease in exposure to the target currency; this gain is economically substantial. For example, for an acquirer worth €100 million in equity, a one-unit decrease in currency exposure leads to a gain of €1.68 million.


  1. Introduction
  2. Data and methods
    1. Sample construction
    2. Measuring currency exposures
    3. Abnormal stock performance
    4. Empirical methods
      1. Difference-in-differences estimator
      2. p-Values
  3. Results
    1. Impacts of cross-border deals on currency exposure
    2. Value effects
  4. Conclusion

To cite this article

Nihat Aktas, Jean-Gabriel Cousin, Jun Yao (Chris) Zhang, “ The value effect of operational hedging: Evidence from foreign takeovers ”, Finance 3/2013 (Vol. 34) , p. 7-30
URL : www.cairn.info/revue-finance-2013-3-page-7.htm.

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