This thesis investigates the complex dynamics of foreign exchange (FX) risk affecting Swedish multinational corporations and their financial performance, with a focus on the impact of company size and periods of economic crisis. Amidst global economic interdependencies, these entities encounter substantial FX risks, primarily due to the volatility of the Swedish Krona (SEK) against major currencies. Utilizing a comprehensive dataset spanning from 2004 to 2023, this study employs an empirical approach grounded in the International Capital Asset Pricing Model (ICAPM) and Purchasing Power Parity (PPP) to analyze the correlation between currency fluctuations and stock valuations. The analysis reveals that both company size and economic crises significantly modulate the effects of FX risks, with larger companies often better positioned to manage these risks through sophisticated hedging strategies. Smaller firms, conversely, show greater sensitivity to economic disruptions, particularly during crises which heighten the volatility of FX impacts. The findings indicate that FX risks significantly influence the financial outcomes of these firms, with both direct impacts on stock returns and indirect effects through operational strategies. The thesis underscores the importance of robust risk management strategies and the potential for policy adjustments to mitigate adverse effects from currency volatility. The insights derived from this research aims to contribute to a deeper understanding of the financial economics of foreign exchange, providing implications for investors and multinational corporations operating in global markets.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:hj-64571 |
| Date | January 2024 |
| Creators | Ekström, Hugo |
| Publisher | Jönköping University, Internationella Handelshögskolan |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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