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Resolving the Exposure Puzzle: Evidence from Taiwanese Corporations

Journal of Financial Studies

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Field Value
 
Title Resolving the Exposure Puzzle: Evidence from Taiwanese Corporations
 
Creator Luke Lin
 
Subject —
 
Description Theoretical research suggests that changes in exchange rates should affect the value of any physical or financial asset. However, empirical research on nonfinancial firms typically produces fewer significant exposure estimates than researchers expects, giving rise to a situation known as “the exposure puzzle”. This paper reexamines the exposure phenomenon for 64 Taiwan listed multinationals by focusing on cash flow approach, instead of capital market approach usually used in previous studies. This paper finds significant exposures in 51.56% of the cases, a level that is higher than in prior research. This finding suggests that the exposure puzzle may result from the inadequate model. This paper further explores the link between exposure and firm characteristics. The results demonstrate that the larger firms have higher short-term exchange rate exposure, while the firms with higher foreign involvement have higher long-term exchange rate exposure.Key words: Exchange rate exposure, Capital market approach, Cash flows approach
 
Publisher Journal of Financial Studies
財務金èžå­¸åˆŠ
 
Contributor —
 
Date 2011-03-03
 
Type —
 
Format application/pdf
 
Identifier http://www.jfs.org.tw/index.php/jfs/article/view/2011032
 
Source Journal of Financial Studies; Vol 18, No 3 (2010); 33
財務金èžå­¸åˆŠ; Vol 18, No 3 (2010); 33
 
Language ch