Abstract
This study finds that a sample of U.S.-based multinational corporations (MNCs) with heavy involvement in Europe is less frequently exposed to European currency risk than to non-European currency risk. Furthermore, 60% of the time, the MNCs without European exposure are found to have non-European exposure. These results are likely due to scale economies in foreign exchange exposure hedging that recently has been suggested in the literature. To the extent that economies of scale in hedging exist, it is likely that MNCs can achieve these economies in areas where they conduct substantial business activities, thus are more able to justify the necessary hedging programs.
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