Abstract
What is currency exposure to foreign exchange risk? How can such exposure be measured? How should internal reporting systems be designed to keep track of it? Should such currency exposures be centrally consolidated by the multinational corporation? Many of the answers to these various questions depend on the nature of the corporation’s involvement in foreign markets.
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Selected Bibliography
Aliber, Robert Z., and Stickney, Clyde P. “Accounting Measures of Foreign Exchange Exposure: The Long and Short of It,” The Accounting Review 50, no. 1 (January 1975), pp. 44–57. An economic assessment of different translation methods.
Burns, Joseph M. Accounting Standards and International Finance (Washington: American Enterprise Institute for Public Policy Research, 1976). The study focuses on the economic implications of FASB Statement 8. Economic value accounting—that is, current value accounting with an adjustment by a general price index where appropriate—should mitigate the distortions stemming from current accounting practices. An excellent conceptual introduction to chapter 6 of this book.
Choi, Frederick D.S., and Mueller, Gerhard G. International Accounting, 2nd edition (Englewood Cliffs, NJ: Prentice Hall, 1992). Excellent introduction to foreign exchange rate accounting.
Financial Accounting Standards Board. Statement of Financial Accounting Standards no. 8: Accounting for the Translation of Foreign Currency Transactions and Foreign Currency Financial Statements (Stamford, CT: FASB, 1975). The title is self-explanatory.
Garlicki, T. Dessa, Fabozzi, Frank J., and Forfeder, Robert. “The Impact of Earnings under FASB 52 on Equity Returns,” Financial Management 16, no. 3 (Autumn 1987), pp. 36–44. Explains how translation exposure is “digested” by the stock market.
Harris, Trevor S. “Foreign Currency Transactions and Translation,” chapter 16 in Handbook of International Accounting, Frederick D.S. Choi, ed. (New York: Wiley, 1991).
Ijiri, Yuji. “Foreign Currency Accounting and Its Translation,” in Management of Foreign Exchange Risk, edited by R.J. Herring, (Cambridge, United Kingdom: Cambridge University Press, 1983). An evaluation of translation methods in the context of Purchasing Power Parity and Interest Rate Parity.
Rosenfeld, Paul. “Accounting for Foreign Operations,” Journal of Accountancy 164, no. 2 (August 1987), pp. 102–112.
Taussig, Russell A., “Impact of SFAS No. 52 on the Translation of Foreign Financial Statements of Corporations in Highly Inflationary Economies,” Journal of Accounting, Auditing and Finance (Winter 1983), pp. 142–156.
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© 1996 Kluwer Academic Publishers
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Jacque, L.L. (1996). Accounting Exposure to Foreign Exchange Risk. In: Management and Control of Foreign Exchange Risk. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-1806-1_6
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DOI: https://doi.org/10.1007/978-94-009-1806-1_6
Publisher Name: Springer, Dordrecht
Print ISBN: 978-0-7923-8088-7
Online ISBN: 978-94-009-1806-1
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