Avoidance Path of Foreign Exchange Risk Management for Overseas Construction Enterprises in China

Abstract

Foreign exchange risk management is the focus of overseas construction enterprise management. The quality of its management will affect the profitability of enterprises to a large extent. It is also an important index for comprehensive evaluation of its internal management. The foreign exchange management strategies of China’s overseas construction enterprises mainly include two ways: operational hedging and financial hedging. According to the data of overseas construction enterprises in China from 2011 to 2018, the empirical application shows that enterprises that use only financial hedging have a negative relationship with corporate profits. The better foreign exchange risk management strategy of enterprises should be a comprehensive foreign exchange risk prevention strategy, which mainly relies on operational hedging supplemented by financial hedging.