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Abstract
We examine the relationship between changes in foreign exchange rates and stock prices of US MNCs. Using firm-specific foreign exchange indices, we find more firms with significant exposure than when a common foreign exchange rate index is used as in comparable studies. We find that the number of firms found to have significant foreign exchange exposure, as well as whether or not particular regions of a firm’s geographic network structure is associated with any exposure, is dependent upon the type of foreign exchange rate index used to capture exposure. The findings in this study highlight the need for caution in the interpretation of previous studies of foreign exchange rate exposure.
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