To estimate foreign exchange (FX) cash flow exposure, one may choose between direct and indirect regression approaches, where the direct approach uses accounting-based cash flow data and the indirect approach uses equity returns as a cash flow proxy. The indirect approach typically includes one...

This text is designed for use in a course in an applied international corporate finance for managers and executives. Instead of the encyclopedic approach, the text focuses on the two main issues of interest to managers who deal with overseas operations. The first main issue is how uncertain...

In interactive trilateral foreign exchange (FX) exposure, a company's exposures to two foreign currencies depend on the two currencies' FX rate with each other. This study uses scenario analysis to get a better understanding of interactive FX exposure and potential financial hedging solutions. A...

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...

For two hypothetical firms with different home currencies, this study compares alternative production locations if the firms compete in one firm’s home country. Using simple three-outcome scenarios, the study shows that a firm’s foreign exchange (FX) exposure depends on the currency location...