Abstract
Contrary to prior research, this U.K.-based study finds a contemporaneous relation between the foreign exchange rate and the market value of large exporters. We also find a weak lagged relationship which suggests that the stock market takes time to incorporate all of the implications of foreign currency movements into share prices. Evidence that the nature of this relationship changed when sterling was in the ERM is also provided.
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*Raymond Donnelly is a lecturer in Accounting and Finance at the Department of Accounting Finance and Information Systems, University College Cork, Cork, Ireland.
**Edward Sheehy is an employee of PRICOA Capital Group Ltd. (a subsidiary of The Prudential Insurance Corporation of America), London, England.
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Donnelly, R., Sheehy, E. The Share Price Reaction of U.K. Exporters to Exchange Rate Movements: An Empirical Study. J Int Bus Stud 27, 157–165 (1996). https://doi.org/10.1057/palgrave.jibs.8490130
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DOI: https://doi.org/10.1057/palgrave.jibs.8490130