A STUDY OF DETERMINANTS OF FIRM VALUE OF INDIAN IT SECTOR: WITH SPECIAL REFERENCE TO EFFECT OF FOREIGN EXCHANGE RISK

Abstract

Foreign currency risk is one of the most common types of risk that foreign businesses face, and risk management has become one of the most important aspects of comprehensive financial management in recent years. The exposure of a company to changes in foreign exchange prices is called foreign exchange risk, whilefirm value is an economic metric that reflects the market value of a company as a whole, i.e. the value that should be distributed among its shareholders and debt holders. The main objective of this study is to identify the effect of foreign exchange exposure on Firm Value for selected Indian IT companies. Five IT companies covering the tenyear data (2009 to 2018) have been selected for the study. Secondary data have been collected from their annual reports which have been analyzed through regression and analysis of variance with a view to predict the effect of foreign exchange risk. The study reveals that Foreign Exchange Risk is least consistent variable and there is a negative correlation between Foreign Exchange Risk on Firm Value.Result of Regression Analysis shows that there isinsignificant positive impact of Foreign Exchange Risk on Firm Value