Report on Foreign Exchange Risk Management Solutions-The Walt Disney Company’s Financing
DOI:
https://doi.org/10.61173/jnpy7431Keywords:
Risk management, Hedging tools, Exchange ratesAbstract
In order to solve special foreign exchange risk problems, this report takes Walt Disney Company as a typical example. It first collects global foreign exchange data in 1985 comprehensively, then discusses the advantages and disadvantages of ordinary hedging tools including forwards, futures, and options in financial risk management. What’s more, it also deeply analyzes the benefits of the special method of swap trading when foreign exchange risks occur, exploring how swap transactions can better match the long-term and complex risk exposure of enterprises. The study found that Goldman Sachs’ method, which involves issuing ten-year ECU euro bonds and converting them into yen liabilities through currency swaps, can effectively avoid the shortcomings of ordinary hedging tools. It not only successfully solves the problem of foreign exchange risks, but also provides a valuable reference for enterprises to face risk management in the future, especially for multinational companies dealing with cross-currency and long-term financial risks.
References
[1] Aabo, T. Exchange rate exposures and strategies of industrial companies: An empirical study. Thunderbird International Business Review, 2001, 43(3), 379-395.
[2] Dhanani, A. The management of exchange-rate risk: A case from the manufacturing industry. Thunderbird International Business Review, 2004, 46(3), 317-338.
[3] Bragg, S. M. (Ed.). Foreign exchange management [Chapter 37], 2012. Wiley.
[4] Weithers, T. (Ed.). Foreign exchange options [Chapter 9], 2012. Wiley.
[5] Ahn, D.-H., Bodoukh, J., Richardson, M., & Whitelaw, R. F. Optimal risk management using options. The Journal of Finance, 2003, 54(1). 359-375.
[6] Allen, S. (Ed.). Introduction [Chapter 1]. In Financial Risk Management: A Practitioner’s Guide to Managing Market and Credit Risk (2nd ed.), 2012. Wiley.
[7] Nason, R., Fraser, J., & Simkins, B. J. Market risk management and common elements with credit risk management [Chapter 14]. In Enterprise Risk Management: Today’s Leading Research and Best Practices for Tomorrow’s Executives. 2009. Wiley.
[8] Broll, U. Exchange rate risk, export and hedging. International Journal of Finance & Economics, 1998, 2(2), 145- 150.
[9] Eyinade, W., Ezeilo, O. J., & Ogundeji, I. A. A Framework for Managing Currency Risk and Exchange Rate Exposure in International Energy Investment Portfolios. International Journal of Scientific Research in Civil Engineering, 2022, 6(6), 218-230.
[10] Badhan, I. A., Neeroj, M. H., & Rahman, S. Currency rate fluctuations and their impact on supply chain risk management: An empirical analysis. International journal of business and management sciences, 2024, 4(10), 6-26.
[11] Lestari, P. A., & Adekunle, A. O. The Impact of Monetary Policies on Corporate Foreign Exchange Risk Management: A Systematic Literature Review Across Emerging Economies. Sinergi International Journal of Accounting and Taxation, 2024, 2(3), 126–139.
[12] Reabetswe, L., Mokatsanyane, D., Ferreira-Schenk, S., van Rensburg, J. J., & Sgammini, R. Analysing Interest Rate and Exchange Rate Volatility on South African Banks’ Stock Returns Considering the COVID-19 Pandemic. Acta Universitatis Danubius. Œconomica, 2022, 18(6).
[13] W. Carl Kester & William B. Allen Walt Disney Company’s Yen Financing. Harvard Business School, 1987. https://store.hbr.org/product/walt-disney-company-s-yenfinancing/287058?sku=287058-PDF-ENG
Downloads
Published
Issue
Section
License
Copyright (c) 2025 by the authors.
This work is licensed under a Creative Commons Attribution 4.0 International License.
