International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

A Study on the Financial Effects on Korean Companies by Exchange Fluctuation around Global Financial Crisis
Jae-gun Eom, Won-sik Sul

Today’s companies face the risk of profit loss from foreign exchange rate. The financial loss caused by the fluctuation of exchange rate has significant impact to the company value on the short and long-term. Sometimes, it makes effect to the success or failure of a company. During the Asian financial crisis in 1997 and the global financial crisis in 2008, many Korean companies went bankrupt due to drastic fluctuation of exchange rate. This paper analyzes the impacts from the exchange rate fluctuation to the elements of the financial statement, with the manufacturing (non-financial) companies that were traded in KOSPI and KOSDAQ. The analysis of the panel data on the paper shows how FX fluctuation can make effects to companies as the interaction effects between foreign currency asset and foreign exchange profit. And it shows the effects of Korean economics during the financial crisis.

Full Text: PDF