The Exchange Rate Exposure of a Global Competitor
AbstractThis paper analyzes the exposure of operating cash flowing to an exogenous exchange rate change for a firm operating internationally as a multimarket oligopolist (i.e., a “global” competitor) and facing demand that depends in a general way on the exchange rate. It is shown that exposure is the sum of a base case exposure identified in other studies and two other components: terms associated with exchange rate-induced demand shifts and terms associated with competitors’s reoptimization following the exchange rate shock. In general, the magnitudes of these additional terms are significant, especially in the presence of asymmetries across markets and firms. Numerical examples are provided that incorporate asymmetries corresponding to stylized facts about some U.S. markets and U.S. manufacturers.© 1990 JIBS. Journal of International Business Studies (1990) 21, 225–242
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal Journal of International Business Studies.
Volume (Year): 21 (1990)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Muller, Aline & Verschoor, Willem F.C., 2006. "Foreign exchange risk exposure: Survey and suggestions," Journal of Multinational Financial Management, Elsevier, vol. 16(4), pages 385-410, October.
- Luca Ricci, 2006.
"Uncertainty, Flexible Exchange Rates, and Agglomeration,"
Open Economies Review,
Springer, vol. 17(2), pages 197-219, April.
- Luca Antonio Ricci, 1998. "Uncertainty, Flexible Exchange Rates, and Agglomeration," IMF Working Papers 98/9, International Monetary Fund.
- Friberg, Richard, 1996. "On the Role of Pricing Exports in a Third Currency," Working Paper Series in Economics and Finance 128, Stockholm School of Economics.
- Bartram, Sohnke M. & Dufey, Gunter & Frenkel, Michael R., 2005. "A primer on the exposure of non-financial corporations to foreign exchange rate risk," Journal of Multinational Financial Management, Elsevier, vol. 15(4-5), pages 394-413, October.
- Yong-Cheol Kim, 1997. "Stock price reaction to international investment and divestiture and management of currency operating exposure," Journal of Economics and Business, Elsevier, vol. 49(5), pages 419-437.
- Bradley, Katrina & Moles, Peter, 2001. "The effects of exchange rate movements on non-financial UK firms," International Business Review, Elsevier, vol. 10(1), pages 51-69, February.
- Oetzel, Jennifer M. & Bettis, Richard A. & Zenner, Marc, 2001. "Country risk measures: how risky are they?," Journal of World Business, Elsevier, vol. 36(2), pages 128-145, July.
- Chen, Cherry C. & So, Raymond W., 2002. "Exchange rate variability and the riskiness of US multinational firms: evidence from the Asian financial turmoil," Journal of Multinational Financial Management, Elsevier, vol. 12(4-5), pages 411-428.
- Hommel, Ulrich, 2003. "Financial versus operative hedging of currency risk," Global Finance Journal, Elsevier, vol. 14(1), pages 1-18, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.