Corporate Risk Exposures, Disclosure and Derivatives Use: A Longitudinal Study

57 Pages Posted: 15 May 2019

See all articles by Ekaterina E. Emm

Ekaterina E. Emm

Seattle University, Department of Finance

Gerald D. Gay

Georgia State University - Department of Finance

Honglin Ren

Renmin University of China - School of Business

Date Written: March 29, 2019

Abstract

We conduct firm and industry level examinations of key market risk exposures deemed material by managers over the period 2002–2016. We find that risk exposures have expanded in line with firms’ growth and globalization and that managers strategically select disclosure formats in recognition of firms’ demand for capital market access and need to protect proprietary information. Currency derivatives use has surpassed that of interest rate derivatives and, conditioned on a firm having the associated risk exposure, commodity derivatives use is the highest. Finally, we find large increases in risk exposures concurrent with the initiation of derivatives use.

Keywords: Derivatives, Disclosure, Regulation, Risk Management

JEL Classification: G18, G23, G32

Suggested Citation

Emm, Ekaterina E. and Gay, Gerald D. and Ren, Honglin, Corporate Risk Exposures, Disclosure and Derivatives Use: A Longitudinal Study (March 29, 2019). Available at SSRN: https://ssrn.com/abstract=3362561 or http://dx.doi.org/10.2139/ssrn.3362561

Ekaterina E. Emm

Seattle University, Department of Finance ( email )

900 Broadway
Seattle, WA 98122
United States
206-296-5785 (Phone)

Gerald D. Gay (Contact Author)

Georgia State University - Department of Finance ( email )

Robinson College of Business
Atlanta, GA 30303-3083
United States
404-413-7321 (Phone)
404-413-7312 (Fax)

Honglin Ren

Renmin University of China - School of Business ( email )

Beijing
China

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