Foreign Exchange Risk Management and Performance of Exporting Firms in Developing Countries a Case Study of Uganda
THE ROLE OF FOREIGN EXCHANGE RISK MANAGEMENT ON PERFORMANCEMANAGEMENT OF EXPORTING FIRMS IN DEVELOPING COUNTRIES: A CASE STUDY OF UGANDA’S EXPORTING FIRMS.
BY TWESIGE DANIEL
ABSTRACT
This study examined the role of foreign exchange risk management (FERM) on performance management of exporting firms in developing countries taking Uganda as the case study. The conceptual framework relating to FERM attributes (currency risk assessment and currency risk management strategies) and the indicators of performance (profitability and sales growth) were constructed.
A cross section and descriptive research design was adopted using a representative sample of 51 exporting firms and the population was drawn using Krejcie and Morgan (1970) method of sample selection. Proportionate stratified sampling and simple random sampling techniques were used to select from manufacturing and agro processing exporting firms. SPSS was used to analyze the data which was presented in tables and graphs. Spearman’s rank correlation coefficient was used to determine the relationship between FERM and performance of the exporting firms and the regression analysis was used to predict the financial performance of the exporting firms.
The findings indicate a moderate applicability level of FERM, low level of financial performance and a significant positive relation between FERM and performance of exporting firms. The researcher recommends that exporting firms should constantly assess their exposure to foreign exchange risk, which can guide them towards a suitable currency risk management. The study concentrated on foreign exchange risk management and performance of exporting company in Uganda. Similar studies can be carried out in Rwanda by analysing multinationals and banking sector
KEY WORDS: FOREIGN EXCHANGE, RISK MANAGEMENT, PERFORMANCE
RÉSUMÉ
Cette étude a examiné le rôle de la gestion des risques des échanges internationaux dans la performance des
BY TWESIGE DANIEL
ABSTRACT
This study examined the role of foreign exchange risk management (FERM) on performance management of exporting firms in developing countries taking Uganda as the case study. The conceptual framework relating to FERM attributes (currency risk assessment and currency risk management strategies) and the indicators of performance (profitability and sales growth) were constructed.
A cross section and descriptive research design was adopted using a representative sample of 51 exporting firms and the population was drawn using Krejcie and Morgan (1970) method of sample selection. Proportionate stratified sampling and simple random sampling techniques were used to select from manufacturing and agro processing exporting firms. SPSS was used to analyze the data which was presented in tables and graphs. Spearman’s rank correlation coefficient was used to determine the relationship between FERM and performance of the exporting firms and the regression analysis was used to predict the financial performance of the exporting firms.
The findings indicate a moderate applicability level of FERM, low level of financial performance and a significant positive relation between FERM and performance of exporting firms. The researcher recommends that exporting firms should constantly assess their exposure to foreign exchange risk, which can guide them towards a suitable currency risk management. The study concentrated on foreign exchange risk management and performance of exporting company in Uganda. Similar studies can be carried out in Rwanda by analysing multinationals and banking sector
KEY WORDS: FOREIGN EXCHANGE, RISK MANAGEMENT, PERFORMANCE
RÉSUMÉ
Cette étude a examiné le rôle de la gestion des risques des échanges internationaux dans la performance des