Founder family influence and foreign exchange risk management

Purpose - The purpose of this study is to explore the influence of founder families in medium-sized manufacturing firms and to investigate the impact of such influence on risk management - more specifically foreign exchange hedging and speculation. Design/methodology/approach - This empirical study uses survey data and publicly available data for descriptive analysis and ordinary least squares/ordered regression analysis. Findings - The authors find that two thirds of medium-sized manufacturing firms are founder family firms in which the founder of the firm or members of his/her family are active in the management team, are members of the board of directors, and/or are shareholders of the firm. The study finds no difference between such founder family firms and other firms in terms of the use/non-use decision related to foreign exchange derivatives but a marked difference in terms of the extent decision. Thus, founder family firms tend not only to hedge but also to speculate more extensively than other firms. Research limitations/implications - The findings are based on medium-sized manufacturing firms in Denmark. Originality/value - This study provides empirical evidence on the influence of founder families in medium-sized firms and adds to the sparse literature on the impact of founder family influence on risk management.