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Abstract
With the development of big data and information technology, the possibility of enhance the control of exchange rate risk in Chinese multinational corporations is increasing. A large of papers have already discussed exchange rate risk management, however the methodology used in accounting remain to be elucidated. This thesis focuses on China Hainan Rubber Industry Group Co. Ltd, analyzes problems of exchange rate management in its financial statements from 2015 to 2019, calculates the impact of exchange gains and losses with different accounting methods, and then discusses the policy implication. We set up a model to explain the details of exchange gains and loss, then subdivide (A) actual exchange gains and losses and (B) financial accounting exchange gains and losses to reflect the enterprise’s business status, and verify the feasibility of this model for practical use. Finally, we provide new policy implications, such as suggestions for accounting entries with classified exchange gains and losses, strengthen enterprise communication management by using IT, and pay attention to the development trend of CNY’s internationalization.
Highlights
This research focuses on exchange rate risk management in Chinese multinational corporations in the era of big data
How do we make better use of the information? How much can enterprises benefit from risk management? Is it possible to modify the existing accounting methods to improve exchange rate risk management? These are the research questions that we aim to address in this thesis
Exchange gains and losses should be booked into the financial expenses and added to the enterprise’s profits and losses
Summary
This research focuses on exchange rate risk management in Chinese multinational corporations in the era of big data. It has important implications for accounting, financial management, information management, amongst other. This research discusses the policy implications for efficient exchange rate risk management across all Chinese multinational corporations. The multinational companies in China are facing the problem of multi-currency calculation. A floating exchange rate policy can influence the net profitability of enterprises. “In 2015 and 2016, the total amount of exchange losses reached 18 billion yuan and 37.5 billion yuan respectively” Liu (2019)
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