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The Study of the Effects of Exchange Rates on the Stock Companies in the Eurozone's Petrochemical Industry

Jana Šimáková ()
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Jana Šimáková: Department of Finance and Accounting, School of Business Administration, Silesian University

No 53, Working Papers from Silesian University, School of Business Administration

Abstract: Company’s involvement in global activities is the primary source of its foreign exchange exposure. Many empirical studies suggest the negative impact of uncertainty about the development of the exchange rate on cash flow and profitability of companies, and thus their market values. Some economic studies show that foreign revenues are positively correlated with the exchange rate exposure and in a short period, currency depreciation negatively affects the market value of listed companies. On the other hand, there are studies that show no statistically significant links between the value of the companies and exchange rates. Considering the importance of the petrochemical industry as one of the strategic sector in Eurozone's economy, the aim of this study is to evaluate the relationship between exchange rate fluctuations and stock market prices in petrochemical industry. This paper applies Jorion’s model and panel regression framework during the period of 2002-2017. This paper provides evidence on the magnitude and speed of the impact of exchange rate shocks.

Keywords: exchange rate; petrochemical industry; stock exchange; currency exposure (search for similar items in EconPapers)
JEL-codes: F31 G12 (search for similar items in EconPapers)
Date: 2018-08-07
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