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The management of strategic exchange risk: evidence from corporate practices

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  • Alpa Dhanani
  • Roger Groves

Abstract

Using a qualitative research methodology, this paper examines the responses of multinational companies (MNCs), their organisational structures, systems and managers to strategic exchange rate risk, a risk resulting from long-term movements in exchange rates. While strategic exchange risk has been categorised as the most important form of exchange rate risk in the academic literature, there appears to be a paucity of examples of the risk actually being managed in practice. This paper seeks to address this inconsistency. Findings from case study research suggest that contrary to results of prior research, companies do attempt to manage the risk, often aligning various organisational factors such as staff and systems to optimise the risk management process. The management of exchange rate risk as a whole appears to have been an evolutionary process with companies progressing gradually from the management of translation risk in the 1970s to that of transaction risk in the 1980s, and more recently to strategic exchange rate risk management.

Suggested Citation

  • Alpa Dhanani & Roger Groves, 2001. "The management of strategic exchange risk: evidence from corporate practices," Accounting and Business Research, Taylor & Francis Journals, vol. 31(4), pages 275-290.
    • Handle: RePEc:taf:acctbr:v:31:y:2001:i:4:p:275-290
    DOI: 10.1080/00014788.2001.9729620
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    References listed on IDEAS

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    1. Stephen Makar & Jay DeBruin & Stephen Huffman, 1999. "The management of foreign currency risk: derivatives use and the natural hedge of geographic diversification," Accounting and Business Research, Taylor & Francis Journals, vol. 29(3), pages 229-237.
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    Cited by:

    1. Muhammad Aftab & Karim Bux Shah Syed & Naveed Akhter Katper, 2017. "Exchange-rate volatility and Malaysian-Thai bilateral industry trade flows," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 44(1), pages 99-114, January.
    2. Works, Richard Floyd, 2016. "Econometric modeling of exchange rate determinants by market classification: An empirical analysis of Japan and South Korea using the sticky-price monetary theory," MPRA Paper 76382, University Library of Munich, Germany.
    3. Mekbib Gebretsadik Haile & Geoff Pugh, 2013. "Does exchange rate volatility discourage international trade? A meta-regression analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(3), pages 321-350, April.
    4. Malcolm Anderson, 2002. "Accounting History publications 2001," Accounting History Review, Taylor & Francis Journals, vol. 12(3), pages 505-512.

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