Corporate Risk Exposures, Disclosure and Derivatives Use: A Longitudinal Study
57 Pages Posted: 15 May 2019
Date Written: March 29, 2019
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: Suggested Citation