Accounting Versus Economic Exposure to Currency Risk

20 Pages Posted: 15 Jan 1998

See all articles by Thomas J. O'Brien

Thomas J. O'Brien

University of Connecticut - Department of Finance

Abstract

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.

JEL Classification: M41, M44, G15

Suggested Citation

O'Brien, Thomas J., Accounting Versus Economic Exposure to Currency Risk. Available at SSRN: https://ssrn.com/abstract=53363 or http://dx.doi.org/10.2139/ssrn.53363

Thomas J. O'Brien (Contact Author)

University of Connecticut - Department of Finance ( email )

School of Business
2100 Hillside Road
Storrs, CT 06269
United States
860-486-3040 (Phone)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1,824
Abstract Views
9,260
Rank
16,890
PlumX Metrics