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Exchange rate exposure of Korean companies : Pre- and post-economic crisis analysis

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  • Exchange rate exposure of Korean companies
  • Lee, Byung-Joo
  • The Association of Korean Economic Studies


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Title Exchange rate exposure of Korean companies
Similar Titles
Sub Title

Pre- and post-economic crisis analysis

Material Type Articles
Author(English)

Lee, Byung-Joo

Publisher

[Seoul]:The Association of Korean Economic Studies

Date 2003
Journal Title; Vol./Issue The Journal of the Korean Economy:vol. 4(no. 2)
Pages 31
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Industry and Technology < Entrepreneurship
Holding AKES

Abstract

This paper examines the relationship between exchange rate movement and individual company's valuation, or exchange rate exposure, in a small open developing economy, specifically South Korea. This paper finds that about 20% of the Korean company's stock performance is statistically significantly impacted by the exchange rate fluctuations. This paper also finds that there is a structural change in the relationship between the exchange rate return and the stock returns before and after the economic crisis. One of the interesting findings of this paper is that the currency depreciation has significantly different impact on the larger companies and on the smaller companies. Before the economic crisis, the currency depreciation has improved the smallest 50 companies' competitiveness in the international markets, thus improving their stock returns. After the crisis, the stock returns of the smallest 50 companies are negatively correlated to the currency depreciation. (The rest omitted)