Accounting Versus Economic Exposure to Currency Risk
20 Pages Posted: 15 Jan 1998
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: 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
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