Resolving the exposure puzzle: The many facets of exchange rate exposure |
| |
| Authors: | Sö hnke M. Bartram,Gregory W. Brown,Bernadette A. Minton |
| |
| Affiliation: | 1. Lancaster University and SSgA, Management School, Department of Accounting and Finance, Lancaster LA1 4YX, UK;2. Kenan-Flagler Business School, The University of North Carolina at Chapel Hill, CB 3490, McColl Building, Chapel Hill, NC 27599-3490, USA;3. Fisher College of Business, The Ohio State University, 834 Fisher Hall, 2100 Neil Avenue, Columbus, OH 43210-1144, USA |
| |
| Abstract: | Theory predicts sizeable exchange rate (FX) exposure for many firms. However, empirical research has not documented such exposures. To examine this discrepancy, we extend prior theoretical results to model a global firm's FX exposure and show empirically that firms pass through part of currency changes to customers and utilize both operational and financial hedges. For a typical sample firm, pass-through and operational hedging each reduce exposure by 10–15%. Financial hedging with foreign debt, and to a lesser extent FX derivatives, decreases exposure by about 40%. The combination of these factors reduces FX exposures to observed levels. |
| |
| Keywords: | G3 F4 F3 |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
