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This paper is a comparative study of the responses to the 1995 Wharton School survey of derivative usage among US non- financial firms and a 1997 companion survey on German non-financial firms. It is not a mere comparison of the results of both studies, but a comparative study, drawing a comparable subsample of firms from the US study to match the sample of German firms on both size and industry composition.
This paper is a comparative study of the responses to the 1995 Wharton School survey of derivative usage among US non-financial firms and a 1997 companion survey on German non-financial firms. It is not a mere comparison of the results of both studies, but a comparative study, drawing a comparable subsample of firms from the US study to match the sample of German firms on both size and industry composition. We find that German firms are more likely to use derivatives than US firms, with 78% of German firms using derivatives compared to 57% of US firms. Aside from this higher overall usage, the general pattern of usage across industry and size groupings is comparable across the two countries. In both countries, foreign currency derivative usage is most common, followed closely by interest rate derivatives, with commodity derivatives a distant third. In contrast to the similarities, firms in the two countries differ notably on issues such as the primary goal of hedging, their choice of instruments, and the influence of their market view when taking derivative positions. These differences appear to be driven by the greater importance of financial accounting statements in Germany than the US and stricter German corporate policies of control over derivative activities within the firm.
This paper presents evidence on derivatives usage by Brazilian non-financial firms, using a sample of 74 companies. The proportion of firms using derivatives in Brazil is comparable to that of other countries already researched. There are economies of scale for derivatives usage, and managers use derivatives for risk management purposes rather than speculation. Derivatives usage across risk classes in Brazil follows patterns observed internationally: companies use derivatives primarily to manage foreign exchange risk, followed by interest rates and commodities exposures. The main concerns of Brazilian managers are linked to taxation and accounting issues rather than to financial and economic aspects.
This paper presents a survey on the risk management function and the usage of hedging instruments by Italian non-financial firms. The objective is to measure how firms manage the following risks: Exchange-foreign, Interest rate, Energetic, Commodity, Equity, Counter-party, Operational, Country. The survey was conducted both for listed and non-listed firms, suggest that Italian firms are less likely to use derivatives than US firms. The percentage of firms using derivatives or insurance instruments has not changed noticeably in the last 10 years. The use of derivatives is more significant among large firms in every risk typology. The reasons to explain the limited practice in derivative markets are the insufficient exposure to risk area to warrant management, the exposure more effectively managed by other means and the difficulties in monitoring/measuring contract effectiveness.
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