A Research On The Foreign Exchange Exposure Of Chinese Listed Companies

After the reform of exchange rate regime,RMB has tended to be more fluctuating,and the problem of our enterprises foreign exchange exposure has also stood out.From the micro view,the focus on the foreign exchange exposure is meaningful for the improvement of the enterprise risk management and their core competence as a whole.From the macro view,focusing on the influence of the exchange rate to many industries especially manufacturing industry is also very important for the stable development of our economy as a major manufacturing country which is highly dependent on foreign trade.Under the background of the international financial crisis,particularly,the dramatic change of the important currencies magnifies the uncertainty of RMB,which emphasizes the importance of the detail analysis of our enterprises' foreign exchange exposure.Accordingly,this paper follows the two main clues of micro and macro aspects and analyzes the characteristics,trends and influencing factors of the foreign exchange exposure of our enterprises by deepening through sections using the cumulative progression framework.Based on the summary of the existing literatures. this paper first make a qualitative analysis of the definition,classification. measurement methods and influencing factors of the foreign exchange exposure. which lays a good foundation of the whole analysis.Thereafter.this paper calculates the level of our foreign exchange exposure through sections based on our manufacturing industry and summarizes the generality as well as the industry features. Meanwhile,this paper also confirm these results by choosing different exchange rate variables and time spans,which finally indicating that the change of RMB influences many of our industries but different in extent.At the same time.the appreciation of RMB has a negative effect on the enterprise value of many of our manufactory industries in short time.such as textile industry,machine building industry,non-ferrous metal metallurgy,chemistry industry,electronic component industry and so on.Based on these results,this paper then tries to conduct the comparative analysis and dynamic analysis.Comparing the foreign exchange exposure between Mainland firms and Taiwan firms,we found in this paper that the foreign exchange exposure of Mainland firms is much bigger than others.Meanwhile.this paper also analyzes the trends of the foreign exchange exposure of different manufacturing industries by rolling regression.Afterwards.this paper analyzes the micro and macro factors influencing our foreign exchange exposure,which turns out that more foreign operation or less capable of risk prevention will probably increase the foreign exchange exposure from the micro view,meanwhile more fluctuation in the exchange rate,the overestimation of RMB and the decrease of global demand will be more likely increase our foreign exchange exposure from the macro view.In the end.this paper tries to make some suggestions on how to reduce the foreign exchange exposure in our country according to the whole analysis results.