Exchange Rate Exposure, Foreign Involvement and Currency Hedging of Firms - Some Swedish Evidence
AbstractThis paper investigates the effect of exchange rate fluctuation on a firm’s value, the so-called exchange rate exposure, for a sample of Swedish firms. In contrast to previous results, using U.S. data, the values of Swedish firms, as reflected in the stock price, seem quite sensitive to movements in the exchange rate. Studying the cross sectional differences in exposure, the estimated exposure is positively and significantly related to the fractional of total sales made broad and negatively related to the use of currency derivatives.
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Bibliographic InfoPaper provided by Sveriges Riksbank (Central Bank of Sweden) in its series Working Paper Series with number 81.
Length: 35 pages
Date of creation: 01 May 1999
Date of revision:
Publication status: Published in European Financial Management, 1999, pages 241-257.
Exchange rate exposure; Foreign activities; Hedging;
Find related papers by JEL classification:
- F30 - International Economics - - International Finance - - - General
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
This paper has been announced in the following NEP Reports:
- NEP-IFN-2001-12-19 (International Finance)
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- Kiymaz, Halil, 2003. "Estimation of foreign exchange exposure: an emerging market application," Journal of Multinational Financial Management, Elsevier, Elsevier, vol. 13(1), pages 71-84, February.
- Veith, Stefan & Werner, Jörg R. & Zimmermann, Jochen, 2009. "Capital market response to emission rights returns: Evidence from the European power sector," Energy Economics, Elsevier, Elsevier, vol. 31(4), pages 605-613, July.
- Katalin Bodnár, 2009. "Exchange rate exposure of Hungarian enterprises – results of a survey," MNB Occasional Papers, Magyar Nemzeti Bank (the central bank of Hungary) 2009/80, Magyar Nemzeti Bank (the central bank of Hungary).
- Muller, Aline & Verschoor, Willem F.C., 2006. "Foreign exchange risk exposure: Survey and suggestions," Journal of Multinational Financial Management, Elsevier, Elsevier, vol. 16(4), pages 385-410, October.
- Hutson, Elaine & O'Driscoll, Anthony, 2010. "Firm-level exchange rate exposure in the Eurozone," International Business Review, Elsevier, Elsevier, vol. 19(5), pages 468-478, October.
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