This study investigates the
determinants of Taiwanese foreign exchange
exposure, using firm-specific operational and
financial variables from 1990 to 2010. After
testing six hypotheses on the relationship
between variables and level of exposure, we find
7 statistically significant determinants which is a
quite large number, compared to the relevant
literature. Foreign operations, size, liquidity,
profitability and hedging have all an impact on
exposure. The ratio export to sales, total assets,
the ratio current assets to total assets and option
hedging increase the level of exposure, while net
sales, net income and forward hedging decrease
it. This research provides a better understanding
of Taiwanese exposure. If a variable increases
the level of exposure, it means that it is related to
a benefit from an appreciation of the domestic
currency.
Relation:
SSRG International Journal of Economics and Management Studies 2(1), pp.45-53