How to calculate U.S value of total assets
Posted: 30 May 2014 03:03 AM   [ Ignore ]
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Hi,

    I now have cross country data. And one of the control variables is firm’s total assets. Since these countries use different currencies, it’s incompariable if I control for the total assets in their own currencies. Some papers propose to calculate U.S. value of total assets. How do I calculate this? Do I have to multiply total assets with the exchange rate? Or, is there data available on the Compustat Global?

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Posted: 30 May 2014 01:19 PM   [ Ignore ]   [ # 1 ]
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hi,

Compustat Global (FUND_G) holds in the currency of the company (variable curcd—ISO Currency Code).

I have not used this table, but it looks like “Exchange Rate Monthly” (G_EXRT_MTH, http://wrds-web.wharton.upenn.edu/wrds/tools/variable.cfm?library_id=7&file_id=52069) holds the info you need to compute the historic value in US$.

best regards,

Joost

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Posted: 15 October 2014 03:40 PM   [ Ignore ]   [ # 2 ]
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How about this: I retrieved also the data item Currency Translation Rate* (currtr). The Currency Translation Rate “represents the rate of exchange used to translate foreign currency amounts into U.S. dollar amounts”, then you only have to multiply the data value to this number to get the USD amount.
For example, a company has assets of 1million GBP in Compustat, and the currency translation rate is 1.5 then the USD amount is 1 million*1.5=1.5 million USD.

*Currency Translation rate is in the FUNDA file as well. Dataset List → Compustat (COMP) → Merged Fundamental Annual File (FUNDA)

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Posted: 17 October 2014 03:01 PM   [ Ignore ]   [ # 3 ]
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I have struggled a bit through currency used in Compustat and I want to share some results that may be helpful. When you retrieve global data from Compustat, you need to know the currency the amount is reported in. There are four data items that convey this information. If you use SAS to retrieve the data, the 4 codes are curcd (ISO Currency Code), curncd (Native currency Code), currtr (Currency Translation Rate), and curuscn (Translation rate from 1 Canadian dollar to the number of USD).

As of today, the tricky thing is that I retrieve different data depending whether I use web interface for Compustat global (1), web interface for Compustat North America (2) or SAS (3) (which has the merged file between compustat north america and compustat global).

Using (1)- WEB INTERFACE FOR COMPUSTAT GLOBAL, a Mexican company will have data reported in MXN. The web interface will only allow you to know the ISO Currency Code (curncd, which is MXN), and total asset is 5726.6630 million MXN.

Using (2)-WEB INTERFACE FOR COMPUSTAT NORTH AMERICA, you can retrieve ISO Currency Code, Native Currency Code, US Canadian Translation Rate. The thing is that you will only find US or Canadian companies using web interface for Compustat North America. The Mexican company is not found here. But for a Canadian company, you will find total asset reported in Canadian dollar.
But note that the web interface for Compustat North America provide three variables: ISO Currency Code (CURCD), Native currency Code (CURNCD) and CURUSCN. Here they also let us know that CURNCD identifies the native currency in which the company reports its financial data. When this item is not equal to CURCD, Compustat has translated the data from CURNCD to CURCD using the translation rate found in CURRTR.

Using (3)- SAS USING FILE FUNDA, you can retrieve ALL THE FOUR DATA ITEMS for both the Mexican company and the Canadian company. The tricky part is here: the Mexican company’s data is now reported in USD (as shown by CURCD) to be 400 mil USD. The original data collected is in MXN (as shown by CURNCD). The data reported here has been translated by COMPUSTAT from 5726.66 million MXN to $400 mil USD using the rate in CURRTR so you don’t have to do anything with non-Canadian companies.
For a Canadian company, the data is still reported in Canadian dollar and you have to manually translate this amount into USD using the CURUSCN.

It sounds a bit complicated but I hope it will be helpful for anyone who has to translate Compustat data into USD.

Best,

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Posted: 17 October 2014 06:03 PM   [ Ignore ]   [ # 4 ]
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hi Diep,

Awesome - thanks for sharing!

best regards,

Joost

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