Foreign exchange transaction exposure management practices of Australian SMEs: an exploratory analysis

McCarthy, Scott (1999) Foreign exchange transaction exposure management practices of Australian SMEs: an exploratory analysis. Small Enterprise Research: The Journal of SEAANZ, 7 (2). pp. 29-42. ISSN 1321-5906

[img]
Preview
Text (Documentation)
Small Enterprise Research.pdf

Download (25Kb) | Preview

Abstract

Firms face foreign exchange (FX) transaction exposure if they have accounts payable and/or receivable in foreign currencies. This paper is an exploratory analysis that aims to discover the FX transaction exposure management practices of small and medium sized Australian enterprises (SMEs). More specifically, the paper examines whether SMEs hedge FX transaction exposure and the reasons for their actions, as well as focusing on the following issues: the importance of the management of FX transaction exposure to SMEs, the frequency of SMEs hedging activities, the type of instruments used for hedging, and the characteristics of SMEs that hedge. To explore these issues, 350 responses from a mail questionnaire administered to SMEs involved in exporting and/or importing located in Brisbane and Sydney were utilised. The results of the study show that the majority of SMEs do not hedge transaction exposure, while most of those that do hedge do so selectively. In addition, forward contracts are found to be the most used hedging instrument and firm size is found to be associated with the decision to hedge.


Statistics for USQ ePrint 13920
Statistics for this ePrint Item
Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Faculty / Department / School: Historic - Faculty of Business - Department of Finance and Banking
Date Deposited: 30 Nov 2007 11:47
Last Modified: 11 Oct 2013 00:35
Uncontrolled Keywords: foreign exchange market; small business management; hedging
Fields of Research : 15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150314 Small Business Management
14 Economics > 1402 Applied Economics > 140210 International Economics and International Finance
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150312 Organisational Planning and Management
Socio-Economic Objective: B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910104 Exchange Rates
URI: http://eprints.usq.edu.au/id/eprint/13920

Actions (login required)

View Item Archive Repository Staff Only