Role of the Exchange Rates in the Stock Price Development of Companies in Chemical Industry
Companyâ€™s involvement in global activities through international trade is the primary source of their foreign exchange exposure. The paper is focused on the relationship between the exchange rate and the value of the firm. The aim is to evaluate the effect of the exchange rates on the stock prices of companies in the chemical industry listed on the stock exchanges in the Visegrad Four countries. The empirical analysis is realized from September 2003 to June 2016 on the companies from petrochemical and pharmaceutical industry. The effect of exchange rate on the stock price is analyzed by Jorionâ€™s approach on the monthly data. Contrary to the selected petrochemical companies, pharmaceutical companies did not use any hedging instruments in the tested period. The effect of exchange rate on the stock price was proved only in the case of pharmaceutical industry. This fact suggests that exchange rate risk could be eliminated by the using of hedging instruments.
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