The Foreign Exchange Risk Exposure And Influencing Factors Of Manufacturing Industry In China

The study of this paper is around the measurement of foreign exchange risk exposure of subsectors of manufacturing industry and influencing factors of foreign exchange risk exposure.We take empirical research for foreign exchange risk exposure level of10subsectors of manufacturing industry. Firstly, we estimate unexpected rate of exchange rate changing by establishing exchange rate determination model. Then, we create the measurement model of foreign exchange risk exposure, take324listed companies from10subsectors of manufacturing industry as samples, and take regression for every sample company, to have estimating and significant test results of every foreign exchange risk exposure coefficient. The empirical results show that:in the10%significance level, there are11.7%companies having significant foreign exchange risk exposure, among which there are58%companies negatively affected by the appreciation of RMB."Metal, Non-metal" subsector benefits more from the appreciation of RMB;"Textile and Apparel" and "Machine and Equipment" subsectors are more negatively affected by the appreciation of RMB.We take empirical research for influencing factors of foreign exchange risk exposure. We conduct cross-sectional regression by taking significant foreign exchange risk exposure coefficients as dependent variable, and the various influencing factors as independent variables, to establish the optimal model and determine the influencing factors by stepwise regression method. The innovation of this paper is: divide the companies which have significant foreign exchange risk exposure into companies negatively affected by the appreciation of RMB (export more/import less) and companies positively affected by the appreciation of RMB (export less/import more), and then respectively study new influencing factors of these two sorts of companies. The empirical results show that:foreign exchange risk exposure has positive correlation with export ratio, quick ratio, net cash flow of operating activities, and negative correlation with total market value, net profit margin. For companies negatively affected by the appreciation of RMB, foreign exchange risk exposure has positive correlation with total asset turnover ratio, the growth rate of basic per share earnings, and negative correlation with research and development costs; For companies positively affected by the appreciation of RMB, foreign exchange risk exposure has negative correlation with the rate of assets and liabilities, the growth rate of basic per share earnings.We hope that through research and analysis, this paper can reflect differences of manufacturing industry subsectors in the degree of influence made by exchange rate changing, and provide companies differently affected by exchange rate changing the basis to prevent foreign exchange risk.