CEO overconfidence and foreign exchange risk management

• Main Authors: HSIAO, CHUNG CHUN, 蕭仲淳
• Other Authors: TSAI, MING HUNG
• Format: Others
• Language: zh-TW
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/s5zk3p

碩士 === 國立中正大學 === 經濟系國際經濟學研究所 === 107 === As more and more companies move toward internationalization, the importance of foreign exchange risk management to the company is gradually increasing. Many companies use derivatives for hedging, so what kind of company characteristics and international market variables will affect the company hedge decision is the goal that this study wants to explore. Because the management is responsible for the company's main operational decisions, and has a considerable degree of influence on the company's risk management decisions. Therefore, this study further examines the manager's personality by overconfidence, and explores how the personality traits of a company's managers affect the company's risk management decisions. The sample of this paper is based on the Taiwan listed and over-the-counter company from 2005 to 2017. The least square method is used to explore the relationship between manager's overconfidence and the sum of hedge positions in the case of different foreign currency assets or liabilities. Our results found that in the case of controlling year and industry fixed effect, overconfident managers will reduce the holding of foreign currency assets or liabilities. On the other hand, overconfident managers will reduce the sum of hedge positions, but after putting the company's characteristic variables and international market variables into the model, overconfident managers will increase the sum of hedge positions. In terms of company characteristic variables, the correlation between most variable and the sum of hedge positions is consistent with research expectation. Therefore,we believe that whether manager have overconfidence will influence the company's foreign exchange risk management decisions, and a company’s hedge positions will depend on company’s characteristics.