Foreign Exchange Exposure and Hedging of Turkish Companies: Panel Data Evidence

Abstract

This study investigates the foreign exchange exposure and determinants of risk for different time horizons of Turkish companies from 1997 to 2011. In order to analyze the effect of the 2001 crisis, the study is split into two sub-periods: pre-crisis, and post-crisis. The empirical findings of the study suggest a negative relationship between exposure and asset turnover ratio, and profit margin, while there was a positive relationship between exposure and leverage. The study also provides empirical support for the fact that the companies with a higher export rate are exposed to higher risk. Finally, large companies are subject to less risk in the short run.