DefinePK

Abstract

This study analyses the impact of exchange rate shocks on firm value as well as on the portfolio of automotive firms from U.S and Japan over a time period of 1999-2007. The effect of intra industry competition on the relation between exchange rate and firm value is also incorporated. The results indicate that Japanese firms are more exposed to the dollar than U.S firms to yen and the exposure to yen and dollar for the U.S and Japanese firms respectively is due to the market share of Japanese firms in the U.S while the exposure to euro for the Japanese firms is due to the market share of German firms in Japan as well as Japanese firms in Germany