The Research On The Influence Of The Renminbi Exchange Rate Fluctuation On The Value Of Listed Companies In China

Under the circumstance of economical globalization, corporations are increasingly engaging in transnational competition and cooperation and surely faced with more challenges and opportunities than ever before, one important problem of which is such exchange rate risk as transaction exposure, translation risk and economic exposure, due to the fluctuation of exchange rates. Exportation has played an significant role in pushing forward Chinese economy for a long time. In recent time, the ratio of dependence on foreign trade in China has soared at an accelerated pace and up to 73.5% in 1997. Since the introduction of the market supply and demand basis, reference to a basket of currencies adjust, managed floating exchange rate system, the Chinese corporations with low managing skill, in particular the import & export firms, are brought to the confront of how to deal with the increasing exchange rate exposure.Working on the basis of the previous research achievements, my paper is seeking to find out the relationship between the exchange rate fluctuation and the value of corporation under Chinese actual economic conditions. The paper analyzes the long-term and short-term influence on the value of the listed firms taking by real effective exchange rate(REER)basing on the econometric analysis of REER. Using Tobin's Q module, my paper makes comparisons of the influence between corporation and its corresponding industry, making the thesis more concrete and comprehensive. The results of my paper shows that the influence varies depending on the firm's competitive power, business practice and profit model, along with its own first-lagged influence. In addition, the influence on the firm and industry can't match with each other.Therefore, in the point of the paper's view , the corporation with high percentage of foreign trade revenue should attach more importance to the prevention of the exchange rate risk, practicing proper management tactics and choose diverse trading derivatives in order to avoid exchange risk and reduce the uncertainty of the future profit.