The Size Effect and Derivative Usage in Japan
The purpose of this paper is to analyse the use of derivative financial contracts in a sample of Japanese firms. Approximately 60% of responding firms use derivatives. Hedging foreign exchange rate risk and interest rate risk are the most common purposes for the use of derivatives with foreign exchange rate forward contracts and interest rate swaps the most common derivatives used. Evidence of a firm size effect with derivatives use is also found. We postulate that the size effect is driven by...[Show more]
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