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- Title
Foreign Exchange Risks.
- Authors
Cescon, Franco; Rossi, Gina
- Abstract
Working capital management is of central importance for both large and small and medium-sized international companies. If, on the one hand, large companies are driven to adopt international strategies such as the global and the transnational one (see the interesting study and empirical analysis in Magnani, 2018, pp. 1-22, as well as Colombo et al., 2018, pp. 319-332), on the other hand, the internationalization of small and medium-sized enterprises - mainly based on exports and multinational-type strategies - has also become extremely important given that, in recent years, the country of origin has seen its importance as a factor of competitive advantage diminish (for a comparison between global strategy, transnational strategy, multi-domestic strategy and export, see: Johnson et al., 2014, p. 270). This study contributes to the managerial finance and accounting literature focusing on the issue of exchange rate risk, connected to the management of working capital, in international companies. The objectives of the study are to examine the importance of international managerial finance final, the effects of exchange rate fluctuations, the risks attributable to transactions in foreign currency and the translation of the financial statements of the foreign branch into the reporting currency used by the parent company. With the help of appropriate examples, the study identifies possible exchange risks that must be adequately managed and controlled. Furthermore, a case study is used to underline the importance of considering the managerial finance and accounting system as an integral part of the organizational architecture (on the subject of the Organizational Architecture of the company, see Zimmerman, 2017, p. 127-160). The case study analysis allows for a better understanding of the implications in terms of procedures, techniques and systems for the management and measurement of exchange rate risks (Scapen, 1990, in an interesting paper, examines "The role of case study method in research management practice").
- Subjects
FOREIGN exchange; MANAGEMENT of capital; NATIONAL currencies; ARCHITECTURE; FOREIGN exchange rates
- Publication
Economia Aziendale Online, 2023, Vol 14, Issue 1, p123
- ISSN
2038-5498
- Publication type
Article
- DOI
10.13132/2038-5498/14.1.123-140