Exchange rate exposure : do size and foreign operations matter?

Purpose – The purpose of this paper is to examine the effect of firm size and foreign operations on the exchange rate exposure of UK non-financial companies from January 1981 to December 2001. Design/methodology/approach – The impact of the unexpected changes in exchange rates on firms’ stock returns is examined. In addition, the movements in bilateral, equally weighted (EQW) and trade-weighted and exchange rate indices are considered. The sample is classified according to firm size and the extent of firms’ foreign operations. In addition, structural changes on the relationship between exchange rate changes and individual firms’ stock returns are examined over three sub-periods: before joining the exchange rate mechanism (pre-ERM), during joining the ERM (in-ERM), and after departure from the ERM (post-ERM). Findings – The findings indicate that a higher percentage of UK firms are exposed to contemporaneous exchange rate changes than those reported in previous studies. UK firms’ stock returns are more affected by changes in the EQW, and US$ European currency unit exchange rate, and respond less significantly to the basket of 20 countries’ currencies relative to the UK pound exchange rate. It is found that exchange rate exposure has a more significant impact on stock returns of the large firms compared with the small and medium-sized companies. The evidence is consistent across all specifications using different exchange rate. The results provide evidence that the proportion of significant foreign exchange rate exposure is higher for firms which generate a higher percentage of revenues from abroad. The sensitivities of firms’ stock returns to exchange rate fluctuations are most evident in the pre-ERM and post-ERM periods. Practical implications – This study provides important implications for public policymakers, financial managers and investors on how common stock returns of various sectors react to exchange rate fluctuations. Originality/value – The empirical evidence supports the view that UK firms’ stock returns are affected by foreign exchange rate exposure.

Technology flows, outsourcing and productivity:an analysis of UK trade and FDI

By engaging in trade and foreign direct investment (FDI) with foreign partners, a country can access the R&D and related knowledge stocks of other countries (by accident or by design) and so benefit from those stocks of knowledge at a cost lower than that which would be incurred by developing the knowledge internally. This should lead to beneficial ‘spillover’ effects on the productivity of domestic firms. However, the literature on technology spillovers from trade and FDI is ambiguous in its findings. This may in part be because of the assumption in much of the work that trade and FDI flows are homogeneous in their determinants and thus in their effects. We develop a taxonomy of trade and FDI determinants based on R&D intensity and unit labour cost differentials, and test for the presence of spillovers from inward investment and imports on an extensive sample of UK manufacturing plants. We find that both trade and FDI have measurable spillover effects, but the size of these effects varies depending on the technological and labour cost differentials between the UK and its trading partners. There is therefore an identifiable link between the determinants and effects of trade and FDI which the previous literature has not explored. We also find that absorptive capacity matters for spillovers from FDI, but not from trade. Overall, these findings suggest that the productivity effects of FDI are largely restricted to plants with high absorptive capacity, while the productivity effects of imports occur largely among higher-technology plants regardless of their absorptive capacity.

Approaches to issues of job regulation. A study at branch level in a white collar, public sector trade union. Available in 2 volumes.

This study examines the internal dynamics of white collar trade union branches in the public sector. The effects of a number of internal and external factors on branch patterns of action are evaluated. For the purposes of the study branch action is taken to be the approach to issues of job regulation, as expressed along the five dimensions of dependence on the outside trade union, focus in issues adopted, initiation of issues, intensity of action in issue pursuit and representativeness. The setting chosen for the study is four branches drawn from the same geographical area of the National and Local Government Officers Association. Branches were selected to give a variety in industry settings while controlling for the potentially influential variables of branch size, density of trade union membership and possession of exclusive representational rights in the employing organisation. Identical methods of data collection were used for each branch. The principal findings of the study are that the framework of national agreements and industry collective bargaining structures are strongly related to the industrial relations climate in the employing organisation and the structures of representation within the branch. Where agreements and collective bargaining structures formally restrict branch job regulation roles, there is a degree of devolution of bargaining authority from branch level negotiators to autonomous shop stewards at workplace level. In these circumstances industrial relations climate is characterised by a degree of informality in relationships between management and trade union activists. In turn, industrial relations climate and representative structures together with actor attitudes, have strong effects on all dimensions of approach to issues of job regulation.

Energy efficient radio access architectures for green radio:large versus small cell size deployment

In this paper new architectural approaches that improve the energy efficiency of a cellular radio access network (RAN) are investigated. The aim of the paper is to characterize both the energy consumption ratio (ECR) and the energy consumption gain (ECG) of a cellular RAN when the cell size is reduced for a given user density and service area. The paper affirms that reducing the cell size reduces the cell ECR as desired while increasing the capacity density but the overall RAN energy consumption remains unchanged. In order to trade the increase in capacity density with RAN energy consumption, without degrading the cell capacity provision, a sleep mode is introduced. In sleep mode, cells without active users are powered-off, thereby saving energy. By combining a sleep mode with a small-cell deployment architecture, the paper shows that the ECG can be increased by the factor n = (R/R) while the cell ECR continues to decrease with decreasing cell size.

Exchange rate exposure:do size and foreign operations matter?

Purpose – The purpose of this paper is to examine the effect of firm size and foreign operations on the exchange rate exposure of UK non-financial companies from January 1981 to December 2001. Design/methodology/approach – The impact of the unexpected changes in exchange rates on firms’ stock returns is examined. In addition, the movements in bilateral, equally weighted (EQW) and trade-weighted and exchange rate indices are considered. The sample is classified according to firm size and the extent of firms’ foreign operations. In addition, structural changes on the relationship between exchange rate changes and individual firms’ stock returns are examined over three sub-periods: before joining the exchange rate mechanism (pre-ERM), during joining the ERM (in-ERM), and after departure from the ERM (post-ERM). Findings – The findings indicate that a higher percentage of UK firms are exposed to contemporaneous exchange rate changes than those reported in previous studies. UK firms’ stock returns are more affected by changes in the EQW, and US$ European currency unit exchange rate, and respond less significantly to the basket of 20 countries’ currencies relative to the UK pound exchange rate. It is found that exchange rate exposure has a more significant impact on stock returns of the large firms compared with the small and medium-sized companies. The evidence is consistent across all specifications using different exchange rate. The results provide evidence that the proportion of significant foreign exchange rate exposure is higher for firms which generate a higher percentage of revenues from abroad. The sensitivities of firms’ stock returns to exchange rate fluctuations are most evident in the pre-ERM and post-ERM periods. Practical implications – This study provides important implications for public policymakers, financial managers and investors on how common stock returns of various sectors react to exchange rate fluctuations. Originality/value – The empirical evidence supports the view that UK firms’ stock returns are affected by foreign exchange rate exposure.