The Effects of Fair Value Reporting on Corporate Foreign Exchange Exposures
56 Pages Posted: 6 Apr 2016
Date Written: January 2016
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: Suggested Citation