Säkring av nettotillgångar i utländska dotterbolag - omfattning och samband
The translation of financial records of foreign subsidiaries gives rise to currency translation adjustments that affect total group equity. If unwanted, fluctuations in translation adjustments can be avoided using net investment hedges. This study aims to find the extent of net investment hedging in Sweden today and in a short historical perspective, and find explanations to varying levels of hedging and firms' decisions to hedge. Based on annual reports, we determine Swedish firms' net investment hedging policies and their level of hedging. The 32 largest companies listed on the Stockholm stock exchange in the years 1993, 2004, 2006, and 2009 are studied. We find that Swedish companies were involved in net investment hedging to a greater extent in 1993 compared to the years 2004-2009. Using logistic regression, we find that the foreign interest rate difference has a significant positive relation to the level of hedging, and relate this to previous studies suggesting that Swedish companies exploited the interest rate arbitrage that was present due to high Swedish interest rates up until the 1990's. A higher equity ratio is also found to have a negative effect on the level of hedging, suggesting that firms with a lower equity ratio have more of an incentive to hedge their equity.