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The Foreign Exchange Exposure of Japanese Multinational Corporations


  • Jia He

    (Chinese University of Hong Kong and the University of Houston,)

  • Lilian K. Ng

    (Hong Kong University of Science and Technology and the University of Southern California)


We find that about 25 percent of our sample of 171 Japanese multinationals' stock returns experienced economically significant positive exposure effects for the period January 1979 to December 1993. The extent to which a firm is exposed to exchange-rate fluctuations can be explained by the level of its export ratio and by variables that are proxies for its hedging needs. Highly leveraged firms, or firms with low liquidity, tend to have smaller exposures. Foreign exposure is found to increase with firm size. We also find that keiretsu multinationals are more exposed to exchange-rate risk than nonkeiretsu firms. Copyright The American Finance Association 1998.

Suggested Citation

  • Jia He & Lilian K. Ng, 1998. "The Foreign Exchange Exposure of Japanese Multinational Corporations," Journal of Finance, American Finance Association, vol. 53(2), pages 733-753, April.
  • Handle: RePEc:bla:jfinan:v:53:y:1998:i:2:p:733-753

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    References listed on IDEAS

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