The Effect Of Changes In The Dollar Foreign Exchange Rate On Stock Returns Of Multinational Corporations

Abstract

<span>Exchange rate movements are considered to be one of the key factors affecting the operating results of multinational corporations (MNC). Several studies have examined the effect of changes in dollar exchange rates on the stock prices of MNC. The results of these studies have been inconclusive about the effects of changes in the dollar exchange rate on the stock prices of companies with significant overseas operations. This study extends previous research by testing the impact of changes in the dollar exchange rate on security returns of MNC using an event study methodology. The results suggest that changes in dollar exchange rates have little or no impact on the stock returns of MNC.</span>