Balance Sheet Exchange Rate Exposure, Investment and Firm Value : Evidence from Turkish Firms
This paper provides evidence for the effects of a combination of balance sheet exchange rate exposure and real exchange rate movements on investment. In highly inflationary developing economies like Turkey, firms use the foreign curency denominated assets and debts to defend themselves against inflationary effects and try to benefit from open positions when the currency is undervalued or overvalued. With measuring balance sheet foreign currency exposures for Turkish Industrial firms in the period of 2000-2003, we show that the degree of exchange rate exposure is correlated with financial positions of the firms, but not with the size and affiliation with either holdings or banks. Based on the evidence that firms value and investment are endogenous, we find that the firms with negative (positive) balance sheet exchange rate exposure decrease their investment by the depreciation (appreciation) of the value of TL. In addition, we show that there is a positive association of expansion in investment with the firm value.
Volume (Year): 3 (2003)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: Head Office, Istiklal Cad. 10 Ulus, 06100 Ankara|
Phone: (90 312) 507 5000
Fax: (90 312) 507 5640
Web page: http://www.tcmb.gov.tr/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:tcb:cebare:v:3:y:2003:i:2:p:1-25. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()or () or ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.