Foreign Exchange Risk Management Of Chinese Born-global Firms

In the 1980 s,there emergenced a kind of new international business in Europe.It jumped the traditional international mode and accelerated its internationalization once it is founded,which was later named “born-global” firms.Research about the born-global firms at home and abroad is still at the stage of qualitative research and case studies.Few studies focus on the risks of born-global firms.As both the volatility of the international economic environment and the RMB exchange rate increases,foreign exchange risk as one of the main sources of born-global firms is very worth exploring and studying.Based the data on 112 Chinese born-global firms,this paper empirically analyses the relationships between the exchange gains and losses and the enterprise performance volatility of the born-global firms.And the paper also explores how the use of foreign exchange derivatives for born-global firms influences the corporate performance.The empirical results show that the change of exchange gains and losses has significantly negative correlation with the performance of the born-global firms,and the enterprise performance volatility and the changes of exchange gains and losses show a significant positive correlation.As to the impact of the use of foreign exchange derivatives on performance volatility,the empirical results show that the use of foreign exchange derivatives is significantly negatively correlated with the volatility of return on assets.However,there is no significant relationship between changes in net profit margin and the use of foreign exchange derivatives.The findings illustrate that the performance of born-global firms is significantly impacted by the foreign exchange rate fluctuations,but the use effect of foreign exchange derivative instruments currently is still not ideal.Governments,financial institutions and enterprises should work together to improve the construction of the foreign exchange risk management system.