The Effects of Fair Value Reporting on Corporate Foreign Exchange Exposures

56 Pages Posted: 6 Apr 2016

See all articles by Alain A. Krapl

Alain A. Krapl

Northern Kentucky University - Department of Economics and Finance

Robert Salyer

Northern Kentucky University - College of Business

Date Written: January 2016

Abstract

We analyze the effects of fair value reporting standards (FVR) SFAS 133 and IAS 39 on foreign exchange (FX) exposures of U.S. multinational firms. We observe reductions in FX exposures to developed market currencies that coincide with the implementation of FVR. Risk reductions mainly affect U.S. multinational firms and to a much lesser extent matched control groups of domestic firms. For firms with exposures to emerging market currencies, we observe no changes in positive FX exposures but substantial shifts in negative exposures resulting in a change of exposure direction.

Keywords: Fair value reporting, SFAS 133, IAS 39, Foreign exchange exposure, Asymmetric foreign exchange exposure

JEL Classification: F3, F39, G15

Suggested Citation

Krapl, Alain A. and Salyer, Robert, The Effects of Fair Value Reporting on Corporate Foreign Exchange Exposures (January 2016). Available at SSRN: https://ssrn.com/abstract=2758283 or http://dx.doi.org/10.2139/ssrn.2758283

Alain A. Krapl (Contact Author)

Northern Kentucky University - Department of Economics and Finance ( email )

Haile/US Bank College of Business
Nunn Drive
Highland Heights, KY 41099
United States

Robert Salyer

Northern Kentucky University - College of Business ( email )

Highland Heights, KY 41099
United States

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