Christie, Eilidh and Marshall, Andrew (2001) The impact of the introduction of the Euro on the foreign exchange risk management in UK multinational companies. European Financial Management, 7 (3). pp. 419-434. ISSN 1354-7798Full text not available in this repository. (Request a copy from the Strathclyde author)
One of the arguments in favour of the euro is that it will eliminate foreign exchange risk for companies in the euro-zone. There could also be benefits for companies outside this zone, although their currency risk with the euro remains. This paper considers this, by examining the effect of the euro on the currency risk management of UK multinational companies (MNCs). Using the responses from a questionnaire and interviews we found that the euro, which is being widely used in UK MNCs, is generally favoured due to reductions in exchange uncertainty and costs of managing currency risk. Nonetheless, contrary to what would theoretically be expected, there was no exact relationship in the reduction in hedging activity accompanied by this reduction in risk. The majority of MNCs stated that their hedging activities would remain unchanged. The capacity of MNCs to benefit from reductions in risk and hedging depend on the proportion of non-UK European trade, the industry sector and the ability to transfer risk down the supply chain. Finally, despite the reductions in currency exposure experienced by the majority of companies the euro will not encourage UK MNCs to expand international trade.
|Keywords:||euro, foreign exchange, risk management, financial management, Commerce, Economics, Econometrics and Finance(all), Accounting|
|Subjects:||Social Sciences > Commerce|
|Department:||Strathclyde Business School > Accounting and Finance
|Depositing user:||Strathprints Administrator|
|Date Deposited:||02 Mar 2008|
|Last modified:||28 Apr 2016 12:03|