Research On Exchange Rate Risk And Enterprise's Foreign Investment Decision Based On Real Option Theory

In recent years,China is vigorously implementing the “One Belt,One Road” national strategy,which provides a good opportunity for Chinese enterprises to achieve overseas capital expansion.At present,the global economic development situation is declining.Increasing economic cooperation among countries is already the main force leading the development of the world economy and has become an irreversible trend.At the same time,China's economy and the global economy are increasingly closely linked.With the rapid development of China's economy,Chinese companies are gradually shifting overseas.Enterprises in the process of foreign investment will certainly encounter a variety of risks.Moreover,the content and form of corporate foreign investment decision-making is far more complicated than domestic investment,the risk is greater and the risk content is more diverse.Therefore,combining multiple risks in corporate investment decision-making investment has become an important method that must be paid attention to.Based on the theory of real options,this paper aims at the exchange rate risk and market risk in the process of Chinese foreign investment,through the mathematical model research,establishes the real option model,and discusses the optimal investment rules of enterprises under uncertain conditions.Through empirical research on data from January 2010 to March 2018,we conduct a regression analysis of the impact of exchange rate risk in the process of corporate foreign investment.Through research,we find that enterprises have greater risks in investing abroad under the double uncertainty of price and the exchange rate,and the value of their investment target enterprises will be greatly affected.In basis of the theory of the real option,this paper regards price and the exchange rate uncertainty in overseas investment,regards the exchange rate and the enterprise's output price as random variables,calculates the value of overseas target enterprises,and establishes the real options model under the price and the rate of exchange uncertainty conditions,for corporate foreign investment decision-making.Calculate the amount of the delayed option of the investment target company(ie,the value of the investment opportunity)and the threshold value that triggers the execution of the investment.The characteristics of optimal investment rules are discussed.The optimal rules of corporate foreign investment are analyzed by numerical values and images.The real process of corporate foreign investment decision-making is simulated by case and compared with the traditional net present value method.Provide a reference for theoretical methods for Chinese companies' foreign investment decisions.Aiming at the unique exchange rate risk in overseas investment,this paper analyzes the exchange rate expectation growth rate and exchange rate volatility to influence the foreign investment decision of the enterprise through the real option model.According to the theoretical analysis results,it is proposed how exchange rate uncertainty built on the real option theory affects.Two assumptions about foreign investment.According to the real option theory and the hypothesis put forward,this paper empirically studies the relationship between the rate of expected growth and volatility of exchange and the foreign investment decision of the enterprise.The regression model of OLS is used to test the basic hypothesis.The regression results are basically in line with the expectations.The rise in the expected growth rate of the US dollar has reduced the total foreign direct investment of Chinese enterprises in the current period.It is believed that the rise in the expected growth rate of foreign currency is higher than the threshold for raising the threshold of foreign investment,and the value of overseas target enterprises is increased.When the uncertainty of the risk of exchange rate fluctuations increases,Chinese enterprises will increase their investment overseas,indicating that the delayed investment effect of real option theory on exchange rate volatility is insufficient.