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Vol. 82, No. 1
Posted 2000-01-01

The Asian Crisis and the Exposure of Large U.S. Firms

by William R. Emmons and Frank A. Schmid

A deep financial and economic crisis ravaged many Asian nations during 1997 and 1998. In this article, the authors examine the impact of the crisis on corporate risk for a subset of large U.S. firms that are included in the S&P 100 stock-market index. They find that the Asian crisis changed many of these firms’ exposure to stock-market movements—that is, their “betas,” or sensitivity to stock-market risk. In particular, the extent of a firm’s sales exposure to Asia appears to be an important link through which the crisis affected beta. This effect is amplified by greater financial leverage.

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