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This study examines the relationship between FX derivative use and corporate value, and investigates the moderating influence of top management team (TMT) educational background, using panel data from Chinese A-share listed companies (2008–2020). Our findings reveal that FX derivative utilization is associated with a significant and economically meaningful enhancement in corporate value. Furthermore, a higher TMT educational attainment amplifies this positive valuation effect. Mechanism analysis indicates that FX derivatives contribute to value creation through multiple channels, including generating tax benefits, reducing financial distress costs, alleviating underinvestment problems and mitigating agency conflicts. Heterogeneity analyses show these effects are more pronounced for non-state-owned enterprises, firms with stronger corporate governance and during RMB depreciation periods. This research contributes to the literature by providing robust evidence on the value-enhancing role of FX derivatives in a key emerging market and highlighting the critical interplay with managerial human capital. The findings offer actionable insights for firms in optimizing derivative strategies and for policymakers in fostering stable financial markets.
Wang et al. (Mon,) studied this question.