Policy uncertainty, derivatives use, and firm-level FDI

Article

Nguyen, Q., Kim, T. and Papanastassiou, M. 2018. Policy uncertainty, derivatives use, and firm-level FDI. Journal of International Business Studies. 49 (1), pp. 96-126. https://doi.org/10.1057/s41267-017-0090-z
TypeArticle
TitlePolicy uncertainty, derivatives use, and firm-level FDI
AuthorsNguyen, Q., Kim, T. and Papanastassiou, M.
Abstract

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.

PublisherPalgrave Macmillan
JournalJournal of International Business Studies
ISSN0047-2506
Electronic1478-6990
Publication dates
Online31 Jul 2017
Print01 Jan 2018
Publication process dates
Deposited09 May 2017
Accepted14 Mar 2017
Output statusPublished
Publisher's version
License
Accepted author manuscript
File Access Level
Restricted
Digital Object Identifier (DOI)https://doi.org/10.1057/s41267-017-0090-z
LanguageEnglish
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