Exchange come in exposure and competition: evidence from the automotive industry
Rohan Williamson*
McDonough School of Business, Georgetown University, Washington, DC 20057, USA Received 20 April 1998; received in revise form 6 January 2000
Abstract This study examines the e! electroshock of real rallying sum up changes on multinational rms and incorporates the e!ect of intra-industry competition on the relation between exchange rates and rm value. To test the relation more e!ectively, tests are conducted using a sample of automotive rms from the United States and Japan. conformable with theoretical predictions, there is signicant exposure to exchange rate shocks. Moreover, there is evidence of time-variation in exchange rate exposure, which is unchanging with changes in the competitive environment within the industry. Finally, evidence is presented that is coherent with contrary sales being a major determinative of exposure and the e!ectiveness of operational hedging through foreign production. 2001 Elsevier Science S.A. All rights reserved.
JEL classixcation: F31; G30; G39 Keywords: Exchange rate exposure; risk of exposure management; Currency exposure; International corporate nance
I would like to thank Bernadette Minton, Tim Opler, Gordon Bodnar, Steve Buser, John Gri$n, Kathleen Kahle, G. Andrew Karolyi, Sara Moeller, Lee Pinkowitz, Frederik Schlingemann, Paul Schultz, G. William Schwert (the editor), Ralph Walkling, and Sonya Williams-Stanton for their laboursaving comments and suggestions. I am especially grateful for the invaluable comments and suggestions from Rene Stulz and H the referee. Also, I would like to thank seminar participants at the 1997 Western pay Association meetings, The Third International Finance Conference at Georgia Institute of Technology, Ohio State University, Arizona State University, Georgetown University, Depaul University, Texas A&M University, Babson College, and the Universities of...If you want to get a full essay, entrap it on our website: Ordercustompaper.com
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