학회 소식
공지사항
[2004년 제 1차] Exchange Rate Inelasticity of Foreign Income of U.S
작성자 : 관리자
조회수 : 847
게시일 :
2004-03-09
This study aims to offer an explanation for the well-known empirical observation that the value of most U.S. multinationals is not sensitive to exchange rate movements. In search of an explanation, I examine the relation between exchange rate movements and the performance of U.S. multinationals` foreign operations. By looking into 2,953 firm-year observations of U.S. multinationals in the S&P 500 index over the period 1984 to 2002, I find that the relation between exchange rate movements and the profitability of foreign operations is very weak. This weak relation occurs mainly because foreign sales of U.S. multinationals are highly variable and not associated with exchange rate movements. The results of the study suggest that the seeming insensitivity of firm value of U.S. multinationals to exchange rate movements is not necessarily becausethey engage in financial or operational hedging activities, but because the performance of foreign operations is subject to high levels of business uncertainties.