The Value Relevance of the Foreign Translation Adjustment
Date Issued
2004
Date
2004
Author(s)
Chen, I-Chun
DOI
zh-TW
Abstract
This study presents an economic analysis of the foreign translation adjustment and empirically examines the association between change in firm value and the foreign translation adjustment for a sample of manufacturing firms.
The study shows that, for firms in the manufacturing sector, most yearly analyses do not support the assumption. However, pooled analysis proves that the translation adjustment is associated with a loss of value instead of an increase in value. The result stems from the fact that, for firms in the manufacturing sector, the accounting rules governing foreign currency translation generally produce results opposite to the economic effects of exchange rate changes. Furthermore, the result also investigates the transaction gain or loss is positive associated with stock return.
Subjects
外幣換算調整數
外幣兌換損益
外匯風險
foreign exchange risk
foreign translation adjustment
foreign transaction gain or loss
Type
other
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