The impact of individual-owners on currency speculation: the case of Danish non-financial firms

Purpose - To investigate the extent to which finance managers in non-financial firms speculate in the currency markets and particularly to investigate the effect of individual-owners on such speculation. Design/methodology/approach - This paper uses survey data in order to analyse the extent of currency speculation in non-financial firms. It uses survey data and publicly available data in an ordered probit regression analysis in order to analyse the decisive factors behind the extent of currency speculation in non-financial firms. Findings - Currency speculation is widespread among non-financial firms and takes the form of selective hedging as well as speculation not related to the underlying business. The extent of speculation is positively related to the size of the firm, to the international involvement of the firm, and to the conservatism of its capital structure. If an individual (often the founder or a descendant of the founder) is the largest shareholder in the firm, the extent of such speculation is significantly reduced. Research limitations/implications - The findings are based on Danish, non-financial firms listed on the Copenhagen Stock Exchange. Originality/value - The contribution of this paper is to provide evidence on the negative relationship between individual-owners (ownership structure) and the extent of currency speculation in non-financial firms and more generally to investigate the factors behind such speculation.