Corporate Cash Flow and Stock Price Exposures to Foreign Exchange Rate Risk

Söhnke M. Bartram

MPRA Paper from University Library of Munich, Germany

Abstract: This paper estimates the foreign exchange rate exposure of 6,917 U.S. nonfinancial firms on the basis of stock prices and corporate cash flows. The results show that several firms are significantly exposed to at least one of the foreign exchange rates Canadian Dollar, Japanese Yen and Euro, and significant exposures are more frequent at longer horizons. The percentage of firms for which stock price and earnings exposures are significantly different is relatively low, though it increases with time horizon. Overall, the impact of exchange rate risk on stock prices and cash flows is similar and determined by a related set of economic factors.

Keywords: corporate finance; risk management; exposure; foreign exchange rates; hedging (search for similar items in EconPapers)
JEL-codes: F4 F3 G3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn and nep-rmg
Date: 2007-05-07
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http://mpra.ub.uni-muenchen.de/6662/

Related works:
Journal Article: Corporate cash flow and stock price exposures to foreign exchange rate risk (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:6662

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