This paper investigates the effect of foreign currency related loss/gain on financial
reports(hereafter accounting exposure) on firm performance of a firms under external audit.
Test result shows that accounting exposure of a firm affects its performance. It indicates that
the amount of a firm’s accounting exposure is large enough to affect the firm’s performance
and that the firm fails to manage the accounting exposure effectively. We also analyze the
difference of a firm’s accounting exposure effect on the firm performance by firm size. Our
test result shows that firm performance is more sensitive to accounting exposure in
small-medium sized firms than large sized firms. This result can be interpreted as the
management of accounting exposure is more demanding for small-medium sized firms. This
paper also tests how differently accounting exposures affect firm performance before and after
the global financial crisis in 2008. Test result shows that the effect of accounting exposure on
firm performance is not alleviated even after the global financial crisis. The findings of this
paper suggest that small-medium sized firms are asked to manage their accounting exposures
more effectively.

Yu, Je-taeck, and Taek-ho Kwon(2014), "Foreign Currency Related Losses on Financial Reports and Firm Performance of External Audit Firms",
       International Business Review, 14(3), 127-149.

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