Report Number

1994-016

Abstract

This study examines the implications of differences in strategy and industry structure for firms' economic exposures to foreign exchange rate movements. Analysis of exchange rate data indicates previous empirical research using a single exchange rate proxy understates economic exposures. This study estimated firms' exposures using a multivariate model. The empirical evidence from U.S. manufacturing firms indicates that foreign direct investment reduces economic exposure to foreign exchange rate movements.

Date of this Version

1-1-1994

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