A key question is why many globally active firms forgo foreign exchange hedging despite its low costs. We propose an explanation based on incomplete hedging markets that further suggests that operational hedging is often a more effective hedge. We use 10-K filings to construct text-based measures of financial hedging and three offshore activities: the sale of output, the purchase of input, and ...

We investigate the strategic order-splitting behavior and order aggressiveness of different types of traders using a unique dataset on the Taiwan Futures Exchange. By examining the trades and orders for each and every account, we find that, as compared to domestic institutional traders and individual traders, foreign institutional traders and futures proprietary firms are more likely to split t...

In this paper we investigate the factors that lead firms to cooperate with partners from foreign countries on innovation activities. Portuguese and German data from the harmonised Community Innovation Survey (CIS III) allow us to compare innovation cooperation behaviour of private firms in the two countries. Using a bivariate probit model, we show that the characteristics of firms cooperating w...

This paper investigates the location of foreign-owned MNC technological activities in the European regions over the period 1987-1995. Specifically, it focuses on the different strategies driving MNCs’ locational choice (to exploit or augment competencies developed in their home base), the influence of the potential for intraand inter-industry spillovers, and externalities stemming from the loca...

We contribute to the literature on Foreign Direct Investment and labour markets by examining wage differentials between domestic and foreign firms, drawing on a large Portuguese matched employer-employee panel. Using OLS, the foreign-firm premium is large and significantly positive but falls substantially when firm and worker controls are added. Moreover, the premium also does not vary monotoni...

Between late 2010 and early 2013, Australia’s net income deficit narrowed to its lowest point since the early 1990s. this article examines the reasons for this narrowing and finds that it was mainly due to declines in the average yields paid by Australian entities on their foreign debt and equity liabilities. the lower average yield paid on foreign debt liabilities reflects a combination of dec...

Firms often cite financing constraints as one of their primary obstacles to investment. Global capital flows, by bringing in scarce capital, may ease host-country firms' financing constraints. However, if incoming foreign investors borrow heavily from domestic banks, multinational firms may exacerbate financing constraints by crowding host-country firms out of domestic capital markets. Combinin...

We extend the trade model with firm heterogeneity developed by Melitz and Ottaviano (2008), incorporating domestic and imported intermediate goods, in order to investigate the impact of import barriers on final and intermediate goods on firms’ decisions to produce and to export. Our main contribution is to disentangle the channels through which these trade policies work. When variable trade cos...

This paper not only determines why individual firms use foreign currency derivative but investigates also what effects this derivatives usage has on the foreign exchange risk exposure of 471 European nonfinancial firms. We find strong evidence in favor of the existence of economies of scale in hedging and show that European firms engage in hedging programs in response to tax convexity. Results ...

T use of H-1B and other work visas to hire foreign information technology (IT) professionals in the United States has attracted significant controversy and policy debates. On one hand, hiring high-skill foreign IT professionals on work visas can be advantageous for U.S. firms and the overall economy. On the other hand, high-skill immigration can adversely impact the wages of foreign and America...