Bartram, Söhnke M., Brown, Gregory W. and Minton, Bernadette A. (2010) Resolving the exposure puzzle: The many facets of exchange rate exposure. Journal of Financial Economics, Vol.95 (No.2). pp. 148-173. doi:10.1016/j.jfineco.2009.09.002

Research output not available from this repository.

Request-a-Copy directly from author or use local Library Get it For Me service.

Request Changes to record.

Abstract

Theory predicts sizeable exchange rate (FX) exposure for many firms. However, empirical research has not documented such exposures. To examine this discrepancy, we extend prior theoretical results to model a global firm's FX exposure and show empirically that firms pass through part of currency changes to customers and utilize both operational and financial hedges. For a typical sample firm, pass-through and operational hedging each reduce exposure by 10–15%. Financial hedging with foreign debt, and to a lesser extent FX derivatives, decreases exposure by about 40%. The combination of these factors reduces FX exposures to observed levels.

Item Type:	Journal Article
Subjects:	H Social Sciences > HG Finance
Divisions:	Faculty of Social Sciences > Warwick Business School > Finance Group Faculty of Social Sciences > Warwick Business School
Journal or Publication Title:	Journal of Financial Economics
Publisher:	Elsevier Science BV
ISSN:	0304-405X
Official Date:	2010
Dates:	Date Event 2010 Published
Volume:	Vol.95
Number:	No.2
Number of Pages:	26
Page Range:	pp. 148-173
DOI:	10.1016/j.jfineco.2009.09.002
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

Request changes or add full text files to a record

Repository staff actions (login required)

View Item