Accounting versus Economic Exposure to Currency Risk
Thomas J. O'Brien
University of Connecticut - Department of Finance
Journal of Financial Statement Analysis, Summer 1997
Financial statements do not accurately reflect the impact of foreign exchange movements on a firm's economic value, particularly if foreign currency debt or derivatives are used to hedge long-term economic exposure. To help analysts and investors interpret financial reporting in this area, this article illustrates the divergence between a firm's accounting exposure and its economic exposure, using scenarios of domestic firms, exporters, and multinationals.
Number of Pages in PDF File: 20
JEL Classification: M41, M44, G15Accepted Paper Series
Date posted: January 15, 1998
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