Do foreign currency risk management strategies increase value in family business?

This paper examines the existence and the magnitude of conflict between family owners and minority shareholders within family firms by assessing the impact of foreign currency (FC hereafter) risk management strategies on firm value. From a secondary agency perspective, we theorize and find evidence that FC risk management policies in family firms are suboptimal and do not create value. Our findings support that family firms develop secondary agency problems reflected in suboptimal hedging policies. These agency problems are mostly present in firms where family control is combined with family management. Our results are robust to a battery of tests.