Corporations are affected by increasing volatilities on foreign exchange markets. A response to this development was the creation of financial instruments, so called derivatives, in order to protect corporations from the effects of flexible exchange rates. To understand the included risks and to...

Although outbound income shifting to low‐tax jurisdictions provides tax savings, it is often accompanied by nontax costs. In this study, I examine whether foreign exchange (FX) risk constrains tax‐motivated outbound income shifting by U.S. multinational corporations. My findings indicate...

This paper examines issues in the prudential management and regulation of foreign exchange risk. It begins with measurement issues, notably converting foreign currency items into domestic currency terms, and calculating foreign exchange positions. The focus then shifts to managing foreign...