Published in:EFA 2003 Annual Conference Paper ; No. 398
Extent:
1 Online-Ressource (69 p)
Language:
Not determined
DOI:
10.2139/ssrn.424883
Identifier:
Origination:
Footnote:
Description:
This paper presents international evidence on the use of financial derivatives for a sample of 7,292 non-financial firms from 48 countries including the U.S. Across all countries, 59.8% of the firms use derivatives in general, while 43.6% use currency derivatives, 32.5% interest rate derivatives, and only 10.0% commodity price derivatives. Firm-specific factors associated with derivatives use are very similar across different countries. Some factors are associated only with specific types of derivatives. Size of the local derivatives market is an important factor determining derivatives use. Other country-specific factors are not consistently significant. Together these results show that a wide range of factors likely determine the use of derivatives by non-financial firms thus explaining the mixed results from studies examining primarily U.S. firms. However, some of the results are unambiguously counter to theoretical predictions. Finally, we examine whether derivatives use is associated with higher firm value. Surprisingly, we find positive valuation effects primarily for firms using interest rate derivatives