The Management of Foreign Exchange Risk in UK Multinationals: An Empirical Investigation

Abstract

Abstract This paper reports the results of an empirical study undertaken during 1988 into how UK multinational corporations try to manage their foreign exchange exposures. The paper concludes, with reservations due to the limited nature of the study, that accounting exposure was managed actively by the majority of respondents, that transaction exposure management was seen as the Centrepiece of their foreign exchange risk management, and that the management of economic exposure was subject to very heterogeneous practices. Further, the surveyed MNCs showed a lower degree of centralisation than could have been expected on the basis of the relevant literature, and the majority of respondents described their companies as ‘totally risk averse’.