The Foreign Exchange Exposures and Enterprise Risk Management: Evidence from Hospitality Industry in Taiwan

  • Chiu Ming Hsiao National Chung Cheng University


This paper adopts ARIMA model to explore the relationship between business performance and the fluctuation of exchange rate. The empirical results show that the impacts of the fluctuation of foreign exchange rate on the business performance of hotels are significant and different across currencies and the size of a hotel.  Furthermore, based on the framework of Kim (2013), a modern portfolio theory proposed by Markowitz (1952) gives an optimal allocation of foreign exchange for a hotel’s decision-makers, who would avoid exchange rate risk exposure and complete the construction of enterprise risk management system (ERM) to reduce losses.

Author Biography

Chiu Ming Hsiao, National Chung Cheng University
Department of Finance
Research Articles