환위험 기업에 대한 재무분석가 이익예측 특성 = The Association between Foreign Currency Risk Exposure and Analysts` Forecast Properties

다국어 초록 (Multilingual Abstract)

This study explores whether firms` foreign currency risk exposure and the effectiveness of foreign currency risk management are associated with analysts` forecast properties. Jacque (1979) suggests that foreign currency risk can be divided into economic exposure to foreign currency risk and accounting exposure to foreign currency risk conceptually. The view of economic exposure to foreign currency risk implies that the performance volatility of firms increases as firms` foreign assets and liabilities increases. The increased volatility makes analysts` forecasting more complex and thereby affects analysts` forecast property. Because many prior studies suggest that analysts` forecasts are optimistically biased and inaccurate when the complexity in forecasting increases (Clement 1999), we expect analysts` forecasts to be optimistically biased and inaccurate when economic exposure to foreign currency risk is high. The view o accounting exposure to foreign currency risk suggests that managers are more likely to put their effort on minimizing the net income effect incurred from foreign currency. If the management of foreign currency risk turns out to be effective, then net income effect from foreign currency would be insignificant, and analysts` forecasts inaccuracy due expect that analysts` earnings forecasts are not significantly different from actual earnings when the management of accounting currency risk is effective. If firm`s risk management to foreign currency turns out to be less effective and the changes in foreign currency affect net income positively(negatively), analysts` earnings forecasts are expected to be pessimistic (optinistic) due to the unexpected currency effects.

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