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Firms, Do You Know Your Currency Risk Exposure? Survey Results

42 Pages Posted: 24 Jan 2000  

Karl Pichler

Universitaet Bern

Claudio F. Loderer

University of Berne - Institute for Financial Management; European Corporate Governance Institute (ECGI)

Date Written: January 5, 2000

Abstract

This paper surveys the currency risk management practices of Swiss industrial corporations. We find that industrials do not quantify their currency risk exposure and investigate possible reasons. One possibility is that firms do not think they need to know because they use on-balance-sheet instruments to protect themselves before and after currency rates reach troublesome levels. This is puzzling because a rough estimate of at least cash flow exposure is not a prohibitive task and could be helpful. It is also puzzling that firms use currency derivatives to hedge/insure individual short-term transactions, without apparently trying to estimate aggregate transaction exposure.

JEL Classification: G15, G30, G32

Suggested Citation

Pichler, Karl and Loderer, Claudio F., Firms, Do You Know Your Currency Risk Exposure? Survey Results (January 5, 2000). Available at SSRN: https://ssrn.com/abstract=203151 or http://dx.doi.org/10.2139/ssrn.203151

Karl Pichler

Universitaet Bern ( email )

Engehaldenstrasse 4
Bern, CH-3012
Switzerland
+41 31 631 37 75 (Phone)
+41 31 631 84 21 (Fax)

Claudio F. Loderer (Contact Author)

University of Berne - Institute for Financial Management ( email )

Engehaldenstrasse 4
Bern, CH-3012
Switzerland
+41 31 631 37 75 (Phone)
+41 31 631 84 21 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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