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Firm-level exchange exposure in the Eurozone


  • Elaine Hutson

    (School of Business, University College Dublin)

  • Anthony O'Driscoll

    (School of Business, University College Dublin)


Using a sample of 1,154 European firms from 11 countries, we show that firm-level exchange exposure for Eurozone and non-Eurozone European firms has increased since the advent of the euro, but this rise was smaller for Eurozone than non-Eurozone firms. The increase in firmspecific risk is offset by a substantial reduction in market-level exchange exposure in most Eurozone countries, so the advent of the Eurozone appears to have been associated with a shift in exchange risk from systematic to firm-specific. We also find that Eurozone firms’ exchange exposure is greater than that of non-Eurozone European firms, and univariate testing confirms the significance of this difference. In a multivariate setting, however, after controlling for countryspecific and firm-specific characteristics that potentially influence the extent of exposure – economic openness, governance factors, firm size, industry and several financial ratios – this difference is no longer apparent.

Suggested Citation

  • Elaine Hutson & Anthony O'Driscoll, 2010. "Firm-level exchange exposure in the Eurozone," Working Papers 200841, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:200841

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    References listed on IDEAS

    1. Friberg, Richard & Nydahl, Stefan, 1999. "Openness and the Exchange Rate Exposure of National Stock Markets," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(1), pages 55-62, January.
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    foreign exchange exposure; euro; Eurozone; economic openness;

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