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Authors personal copy Journal of Banking Finance 33 (2009) 1973–1982 Contents lists available at ScienceDirect Journal of Banking Finance journal homepag e: www.elsevier.c om/locate/jbf Does multinationality matter? Implications of operational hedging for the exchange risk exposure q Jongmoo Jay Choi a,*, Cao Jiang b a Department of Finance, Temple University, Fox School of Business, Philadelphia, PA 19122, United States b School of Business, Holy Family University, Philadelphia, PA 19114, United States a r t i c l e i n f o a b s t r a c t Article history: An important issue in global corporate risk management is whether the multinationality of a firm matters Received 1 September 2008 in terms of its effect on exchange risk exposure. In this paper, we examine the exchange risk exposure of Accepted 18 April 2009 US firms during 1983–2006, comparing multinational and non-multinational firms and focusing on the Available online 24 April 2009 role of operational hedging. Since MNCs and non-multinationals differ in size and other characteristics, we construct matched samples of MNCs and non-multinationals based on the propensity score method. JEL classifications: We find that the multinationality in fact matters for a firm’s exchange exposure but not in the way usu- G3 ally presumed – the exchange risk exposures are actually smaller and less significant