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Internationalization, foreign exchange exposure and firm risk

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  • Likitwongkajon, Napaporn
  • Vithessonthi, Chaiporn

Abstract

This paper examines the effect of internationalization on variation in operating performance. Analyzing a sample of non-financial firms in Switzerland during 2000–2020, we document two key findings. First, internationalization is positively associated with variation in operating performance. However, neither operational-hedging internationalization nor revenue-seeking internationalization moderates the relation between internationalization and variation in operating performance. Second, our findings show that the unhedged foreign exchange exposure neither strengthens nor weakens the effect of internationalization on variation in operating performance. Further analyses show that internationalization is not associated with firm performance.

Suggested Citation

  • Likitwongkajon, Napaporn & Vithessonthi, Chaiporn, 2022. "Internationalization, foreign exchange exposure and firm risk," International Review of Financial Analysis, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:finana:v:83:y:2022:i:c:s105752192200285x
    DOI: 10.1016/j.irfa.2022.102334
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    More about this item

    Keywords

    Foreign exchange exposure; Foreign investments; Firm risk; Performance volatility; Switzerland;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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