The impact of the asian financial crisis on U.S. multinationals

Abstract

This paper examines the impact of the Asian crisis on U.S. firms. We find that while neither the average U.S. firm nor the average U.S. multinational was affected by the crisis, U.S. multinationals with presence in East Asia were negatively and significantly affected. On average, these firms experienced a sizable (−1.43%) abnormal return per month during the crisis period. We also find that currency derivatives use and potential operational hedging strategies did not significantly protect firms from the East Asian crisis. This is perhaps due to the magnitude of the shock and the resultant lack of liquidity in the derivatives markets during and after the crisis.

Citation

Allayannis, G. and Weston, J.P. (2002), "The impact of the asian financial crisis on U.S. multinationals", Choi, J.J. and Powers, M.R. (Ed.) Global Risk Management: Financial, Operational, and Insurance Strategies (International Finance Review, Vol. 3), Emerald Group Publishing Limited, Leeds, pp. 117-130. https://doi.org/10.1016/S1569-3767(02)03011-X