Firm-Level Competition and Exchange Rate Exposure: Evidence from a Global Survey of Firms

Bergbrant, M., Campbell, K., and Hunter, D, 2014. Firm-Level Competition and Exchange Rate Exposure: Evidence from a Global Survey of Firms, in Financial Management, Forthcoming

47 Pages Posted: 11 Jun 2014

See all articles by Mikael C. Bergbrant

Mikael C. Bergbrant

St. Johns University

Kaysia Campbell

East Carolina University - Department of Finance

Delroy M. Hunter

University of South Florida

Date Written: January 23, 2014

Abstract

We examine the effect of competition on exchange rate exposure using survey data from 55 countries. We find that exposure increases with the intensity of competition. Exposure is higher when firms face price competition in international and domestic product markets and when rivals compete using an unfair financial advantage. Furthermore, competition is a leading determinant of exposure, dominating the usual determinants. Exposure also increases with several determinants not previously empirically examined, such as firm-level financial constraints. These results hold for small, large, foreign-involved, and purely domestic firms. Finally, import-only firms have higher exposure than export-only firms. Our survey results are likely to capture exposure before firms’ hedging actions.

Keywords: firm-level competition, exchange rate exposure, foreign exchange risk, foreign trade, purely domestic firms, financial constraints

JEL Classification: F23, F31, G15

Suggested Citation

Bergbrant, Mikael C. and Campbell, Kaysia and Hunter, Delroy M., Firm-Level Competition and Exchange Rate Exposure: Evidence from a Global Survey of Firms (January 23, 2014). Bergbrant, M., Campbell, K., and Hunter, D, 2014. Firm-Level Competition and Exchange Rate Exposure: Evidence from a Global Survey of Firms, in Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2447985

Mikael C. Bergbrant

St. Johns University ( email )

8000 Utopia Parkway
Queens, NY 11439
United States
8134476288 (Phone)

HOME PAGE: http://www.bergbrant.com

Kaysia Campbell

East Carolina University - Department of Finance ( email )

United States

Delroy M. Hunter (Contact Author)

University of South Florida ( email )

Dept of Finance, Muma College of Business
4202 E. Fowler Ave, BSN3403
Tampa, FL 33620
United States
(813) 843-2085 (Phone)
(813) 974-3084 (Fax)

HOME PAGE: http://www.usf.edu/business/contacts/hunter-delroy.aspx

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