Wharton Survey of Derivatives Usage by U.S. Non-Financial Firms

Bodnar, Gordon M.; Hayt, Gregory S.; Marston, Richard C.; Smithson, Charles W.

doi:10.2307/3665538

Cited by 235 publications

(137 citation statements)

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“…These observations are consistent with recent Wharton/CIBC Wood Gundy survey results for non-financial US corporations (see Bodnar, Hayt, andMarston, 1996, andSmithson, 1997) and with survey results for a sample of New Zealand firms reported in Berkman, Bradbury, and Magan (1997). Table 2 examines the sample by industry according to two-digit SIC classification.…”

Section: B Sample Descriptionsupporting

confidence: 86%

The Underinvestment Problem and Corporate Derivatives Use

Nam¹

1998

Financial Management

241

186

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Section: B Sample Descriptionsupporting

confidence: 86%

The Underinvestment Problem and Corporate Derivatives Use

Nam¹

1998

Financial Management

241

186

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“…A large number of studies have documented the extent and nature of derivatives' use by non-financial firms. Some of these studies are based on survey data, such as the Wharton survey of U.S. non-financial firms (Bodnar, Hayt and Marston, 1998;Bodnar, Hayt and Marston, 1996;, as well as other surveys of U.S. firms (e.g. Nance, Smith and Smithson, 1993).…”

Section: Frequency and Effect Of Derivative Use By Firmsmentioning

confidence: 99%

The Effects of Derivatives on Firm Risk and Value

2009

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Using a sample of 6,888 non-financial firms from 47 countries, we examine the effect of derivative use on firms' risk measures and value. We control for endogeneity by matching users and non-users on the basis of their propensity to hedge. We also use a new technique to estimate the effect of omitted variable bias on our inferences. We find strong evidence that the use of financial derivatives reduces both total risk and systematic risk. The effect of derivative use on firm value is positive but weak, and is more sensitive to endogeneity and omitted variable concerns. This increased sensitivity could account for the mixed evidence in the literature on the effect of hedging on firm value. Keywords The Effects of Derivatives on Firm Risk and Value AbstractUsing a sample of 6,888 non-financial firms from 47 countries, we examine the effect of derivative use on firms' risk measures and value. We control for endogeneity by matching users and non-users on the basis of their propensity to hedge. We also use a new technique to estimate the effect of omitted variable bias on our inferences. We find strong evidence that the use of financial derivatives reduces both total risk and systematic risk. The effect of derivative use on firm value is positive but weak, and is more sensitive to endogeneity and omitted variable concerns. This increased sensitivity could account for the mixed evidence in the literature on the effect of hedging on firm value.

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“…Thus, currency futures contracts are similar to forward contracts in terms of their obligation, but differ from forward contracts in the way they are traded. 2 They are commonly used by some Bangladeshi firms to hedge their foreign currency positions. In addition, they are traded by speculators (often the treasury managers of firm in case of Bangladesh) who hope to capitalize on their expectations of exchange rate movements.…”

Section: Hedging Exposures With Currency Future Contract In Fx Marketmentioning

confidence: 99%

Measuring Efficiency of Using Currency Derivatives to Hedge Foreign Exchange Risk: <i>A Study on Advanced Chemical Industries (ACI)</i> in Bangladesh

Jahan¹

2016

IJEFM

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Abstract:Firms with greater growth opportunities and tighter financial constraints are more likely to use currency derivatives. This suggests that firms might use derivatives to reduce cash flow variation that might otherwise preclude firms from investing in valuable growth opportunities. Although in Bangladesh, the use of currency derivatives to hedge foreign exchange risk is not popular among the existing firms engaged in foreign exchange transactions, there are a few firms such as ACI & General Motors etc with extensive foreign exchange-rate exposure and economies of scale in hedging activities are more likely to use currency derivatives. This is because, given the potential shifts in the supply of or demand for currency, firms and individuals who have assets denominated in foreign currencies can be affected favorably or unfavorably. These firms may want to alter their currency exposure in order to grab benefit or hedge risk from the expected movements of exchange rates. This study provides a detailed analysis along with a background on currency derivatives which are commonly used by some of large firms existing in Bangladesh in order to capitalize on or hedge against expected exchange rate exposures measured by these firms. In this paper, we have also divulged an analytical framework for measuring exchange rate exposures accelerating the use of currency derivatives in foreign exchange market of Bangladesh.

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Wharton Survey of Derivatives Usage by U.S. Non-Financial Firms

Cited by 235 publications

References 0 publications

The Underinvestment Problem and Corporate Derivatives Use

The Underinvestment Problem and Corporate Derivatives Use

The Effects of Derivatives on Firm Risk and Value

Measuring Efficiency of Using Currency Derivatives to Hedge Foreign Exchange Risk: <i>A Study on Advanced Chemical Industries (ACI)</i> in Bangladesh

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Wharton Survey of Derivatives Usage by U.S. Non-Financial Firms

Cited by 235 publications

References 0 publications

The Underinvestment Problem and Corporate Derivatives Use

The Underinvestment Problem and Corporate Derivatives Use

The Effects of Derivatives on Firm Risk and Value

Measuring Efficiency of Using Currency Derivatives to Hedge Foreign Exchange Risk: &lt;i&gt;A Study on Advanced Chemical Industries (ACI)&lt;/i&gt; in Bangladesh

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Measuring Efficiency of Using Currency Derivatives to Hedge Foreign Exchange Risk: <i>A Study on Advanced Chemical Industries (ACI)</i> in Bangladesh