Policy uncertainty, derivatives use and firm-level FDI

Nguyen, Quang and Kim, Trang and Papanastassiou, Marina (2018) Policy uncertainty, derivatives use and firm-level FDI. Journal of International Business Studies, 49 (1). pp. 96-126. ISSN 0047-2506

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We explore the link between uncertainty in economic policy, firm level FDI, and firm hedging behaviour - building upon a newspaper-based index of economic policy uncertainty (EPU). We find that relative difference in EPU between home and host country has a significant relationship with FDI. Firms increase their FDI level in countries, which have a low level of EPU relative to their home country. In addition, firms use derivatives more intensively in response to an increase in EPU. Interestingly, the link between EPU and corporate derivatives use varies according to the type of firm. Domestic MNCs make the most effective use of derivatives to hedge against EPU exposure.

Item Type: Article
Research Areas: A. > Business School > Economics
A. > Business School > International Management and Innovation
Item ID: 21794
Useful Links:
Depositing User: Quang Nguyen
Date Deposited: 09 May 2017 13:30
Last Modified: 19 Jan 2018 18:06
URI: http://eprints.mdx.ac.uk/id/eprint/21794

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