You are here
relationships between exchange rate exposure and European positioning of multinational corporations
| Title: | The relationships between exchange rate exposure and European positioning of multinational corporations. |
 162 views 60 downloads |
|---|---|---|
| Name(s): |
Martin, Anna D. Florida Atlantic University, Degree Grantor Madura, Jeff, Thesis Advisor |
|
| Type of Resource: | text | |
| Genre: | Electronic Thesis Or Dissertation | |
| Date Issued: | 1995 | |
| Publisher: | Florida Atlantic University | |
| Place of Publication: | Boca Raton, Fla. | |
| Physical Form: | application/pdf | |
| Extent: | 225 p. | |
| Language(s): | English | |
| Summary: | Exchange rate fluctuations create disparate types and degrees of exposure. Cash flows and net income fluctuate as result of exchange rate fluctuations. Consequently, shareholders, debtholders, and management closely monitor exposure. This dissertation investigates characteristics that explain the differential exposure of U.S.-based multinational corporations (MNCs) and examines conditions that influence exposure to shift over time. Operating characteristics that represent economic and accounting exposure are empirically studied to determine their impact on the overall exposure of MNCs. First, the results show that MNCs with imbalances in foreign currency inflows and outflows are more sensitive to exchange rate changes. A simple measure of European involvement is not adequate to assess the level of exposure. Second, it is found that the degree of export sales is a significant determinant of exposure. Third, there is strong support that accounting exposure is relevant. The translation effect on earnings is found to be significantly related to overall exposure. It is feasible that the dynamic nature of the international marketplace and MNC operations influence exposure to shift over time. First, the European Community Exchange Rate Mechanism (ERM) crisis is studied. The ERM crisis provides an opportunity to assess the effects on exposure when a tightly-controlled exchange rate regime becomes more relaxed. Using portfolio returns, U.S.-based MNCs operating in Europe experienced a positive shift in exposure, indicating returns are positively related to a strengthening dollar, following the onset of the ERM crisis. The strength of the dollar is another condition examined. Due to potential asymmetric responses, exposure may shift as the strength of the dollar changes. The asymmetric hedging hypothesis is not strongly supported while there is some support for the asymmetric competitive response hypothesis. The effects of repositioning on exposure are also studied. This analysis differs from the previous analyses of shifts in exposure since repositioning activities are predominantly under management's control. There is some evidence that exposure is a variable that continually changes as repositioning occurs. A subset of MNCs with returns that are negatively affected by a strong dollar displays time-varying exposure due to changes in their imbalance of foreign currency inflows and outflows. | |
| Identifier: | 12428 (digitool), FADT12428 (IID), fau:9323 (fedora) | |
| Note(s): |
College of Business Thesis (Ph.D.)--Florida Atlantic University, 1995. |
|
| Subject(s): |
International Business Enterprises Foreign Exchange Rates International Finance |
|
| Held by: | Florida Atlantic University Libraries | |
| Persistent Link to This Record: | http://purl.flvc.org/fcla/dt/12428 | |
| Sublocation: | Digital Library | |
| Use and Reproduction: | Copyright © is held by the author with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder. | |
| Use and Reproduction: | http://rightsstatements.org/vocab/InC/1.0/ | |
| Host Institution: | FAU | |
| Is Part of Series: | Florida Atlantic University Digital Library Collections. |
