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Foreign exchange exposures of Korean firms

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  • Foreign exchange exposures of Korean firms
  • Cho, Sungbin; Song, Min-Kyu
  • Korea Institute for International Economic Policy


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Title Foreign exchange exposures of Korean firms
Similar Titles
Material Type Articles
Author(English)

Cho, Sungbin; Song, Min-Kyu

Publisher

[Seoul]:Korea Institute for International Economic Policy

Date 2011
Journal Title; Vol./Issue Journal of East Asian Economic Integration:vol. .15(no. 1)
ISBN 1598-2769
Pages 32
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic System
Industry and Technology < Entrepreneurship
Holding KIEP

Abstract

We measure foreign exchange exposures as sensitivity of firm’s value to FX premium in the CAPM plus FX premium model, and try to find determinants of the exposures; using data of non-financial companies listed in the Korea Exchange from the year 2007 to 2008. Main findings are as follows. If Korean won depreciates, only a small number of firms is benefitted while majority of firms are harmed to the contrary of common knowledge. As a firm’s export increases, the foreign exchange exposure increases up to a certain level and after that it declines. And, smaller firms of negative foreign exchange exposures are more sensitive to foreign exchange changes. These suggest heterogeneous effects of foreign exchange rates on industries and firms.