The Exchange Rate Risk Study And Measurement Of Foreign Related Companies Listed In China

In the context of economic globalization and world economic integration, China plays a more and more important role in the world economy.It has became an important partner of Europe、the United States、Japan and other countries and regions.The relationship of economic development between China and other countries are becoming more and more closer.Under this background, many deffrent industries’companies, which promote the development of our country’s economy, are increasingly involved in the world market.So as to seek a broader space for development. Since July21,2005, China began to implement a managed floating exchange rate system. Under this background, foreign-related companies in China always faced with exchange rate risk. At the same time, the exchange rate risk also gradually attracts attention of those companies.Managing exchange rate risk properly could inhance the ability of those enterprises to face the competition from the world market. Minimizing the adverse effects of exchange rate risk by full using ourselves advantages.Under the background of China’s economic ties closely with other countries, The study object of this article are listed companies which concerning foreign affairs management.All of them are widely involved in the world economy market.The522sample companies studied are coming from22different industries. The purpose of the study is to analyse the exchange rate risk situation faced by those companies by using historical data statistically. At the same time, the exchange rate risk exposure coefficient model will be used to analyze the sample’s exchange rate risk exposure coefficient and direction. Finally, based on different types of exchange rate risk,the article put forward some suggestions and concrete operation methods to manage foreign exchange rate risk.During this paper, the first chapter give an instruction to the study item.as well as presenting the literature about the exchange rate risk management at home and abroad.In the second chaper present the theories about exchange rate risk.In the third chapter,based on the statistical analysis method,chart will be used to analyze the exchange risk faced by522foreign-related companies listed in China, which from22industries.The analyse is mainly from two aspects:accounting conversion risk and business risk. The fourth chapter builds model to estimate and analyze foreign exchange rate risk exposure situation about the sample of250foreign-related companies listed in China.Contrast with other modles which directly use the spot exchange rate as the factor that affect the value of the company, the forward RMB exchange rate will be used in this paper instead.That is using the difference between the forward and the corresponding spot RMB exchange rate as an explanatory variable to analyze the value of companies. The exchange rate difference reveals the change which people did not expected. When hedging the exchange rate risk, people mainly reference to forward RMB exchange rate, the part of the RMB exchange rate change which failure to maintain can most reflect the exchange rate exposure situation faced by foreign-related companies. The fifth chapter will put forward advices to manage the accounting risk, transaction risk and economic risk respectively.Also combined with examples to explain the principles.Through the analysis above, the results show that the financial insurance industry, the mining and the transportation warehousing industry facing high accounting conversion risk when compared with other industries. At the same time, the financial insurance industry and the transportation warehousing industry also facing serious negative impact of exchange rate changes on cash flow. When measuring the coefficient of exchange rate risk exposure, the difference between the forward and the spot exchange rate can be a very good fitting variable of enterprise stock price volatility.The calculated results show that in the sample of250foreign-related companies listed, the exchange rate risk exposure coefficient estimated that64.4%listed companies have got through the test in a significance level of5%.There are91companies’exchange rate exposure direction are positive and70’s are negative.