An Analysis of the degree of foreign exchange exposure of Philippine publicly-listed companies with foreign transactions

• Main Authors: Bihis, Kenneth Drexel S., Concepcion, Lucille A., Lim, Cindylene T., Rayo, Erika Joy A.
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Foreign exchange > Philippines
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/14699
• Institution: De La Salle University

Since firms are beginning to face the challenges of globalization, the importance of foreign exchange (FX) is becoming more apparent as companies started to be exposed to FX fluctuations. With that, the researchers present a study which would help in predicting and assessing the FX exposure of selected Philippine companies with foreign transactions. In this study, the level of FX exposure is examined, as well as its determinants. A two-step process will be involved, (1) analyzing firm and industries based from the effect of foreign exchange rate fluctuations and market movements with stock returns through a time-series multiple regressions and (2) analyzing the predictability of seven accounting and proxy variables with foreign exchange exposure of selected publicly listed companies in the Philippines with FX transactions for a period of 5 years using a panel data regression. Result of the study in the first regression have shown that both FX exposure and market movements can significantly affect some of the firms and industries. In the second regression, gross profit margin, asset turnover and debt-to-equity are among the seven variables examined which have shown significant effect on the firms’ FX exposure.