An Empirical Study of the Foreign Exchange Exposure in Taiwan Chemical Industry

• Main Authors: Yu-Wen Hsiao, 蕭郁雯
• Other Authors: 陳思寬
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/56491073562229575625

碩士 === 國立臺灣大學 === 國際企業學研究所 === 100 === Taiwan relies on international trade to develop economic activities due to the country location and being lack of natural resources. Thus, foreign exchange definitely has impacts on Taiwan’s companies. Our research applies both market-based and cash-based method to investigate how exchange rate exposure affects Taiwan’s companies. Reviewing the past research conducted by domestic literatures, they concentrated more on industries like electronic, financial and components of stock index. Those literatures ignore the chemical industry which plays an important role in the international trade of Taiwan. Thus, our research selects chemical industry as the research target to study its exposure to USD from year of 2001 to 2010. Empirical results show that under market-based method, 70% of the 30 sample companies exhibit significant exchange rate exposure to USD of 10% significance and 63% of which exhibit significant exchange rate exposure to USD of 5% significance. When applying cash-based method, 40% companies show significant USD exposure while long-term exposure significant rate, 71.43%, is much higher than short-term exposure significant rate, 30.43%, proving that companies are prone to facing exchange rate exposure under longer period. Furthermore, we continue researching the potential determinants of exchange rate exposure under market-based method. By applying five potential determinants, empirical result shows that only company size and growth rate have significant impacts on exchange rate exposure. Company size has negative coefficient with exchange rate exposure while growth rate has positive one. The rest of the determinants: export rate, inventory and account receivable to equity and current ratio do not show significant coefficient with exchange rate exposure.