Foreign Currency Translation Method Choice: Insights From Game Theory

  • Pinto J
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Abstract

This paper utilizes a game-theoretical framework to analyze managerial behavior in the context of choosing foreign currency translation methods. The aforementioned problem can be constructed as a model of decision-making under uncertainty. The results of this analysis are as follows: adopt the current rate method when managerial compensation is a function of reported accounting earnings; conversely the temporal method should be employed when managerial compensation takes the form of stock options.

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Pinto, J. A. M. (2011). Foreign Currency Translation Method Choice: Insights From Game Theory. Journal of Applied Business Research (JABR), 18(4). https://doi.org/10.19030/jabr.v18i4.2126

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