Derivative usage by non‐financial firms in Sweden 1996 and 2003: what has changed?

Abstract

Purpose

The purpose of this paper is to investigate Swedish non‐financial firms’ use of derivatives in 2003 and to compare the results with an earlier study investigating Swedish firms in 1996. This comparison is motivated by our interest in if and how the derivative practices of firms have changed over the seven years that passed between the two surveys.

Design/methodology/approach

Surveys are used to make comparisons between years. For this study, the authors used a similar questionnaire as Alkebäck and Hagelin, and investigate a similar sample of firms. Firms are classified according to firm size and industry to study changes in derivative usage for different types of firms.

Findings

The results show among other things that: 59 per cent of the Swedish firms use derivatives today compared to 52 per cent in 1996; this relatively modest change for the total sample hides significant increases in derivatives usage for small and medium sized firms; the use of derivatives for hedging the balance sheet among Swedish firms in 2003 is higher than for other countries but lower than for Swedish firms in 1996 suggesting that Swedish firms conform to international practice; and the issue of greatest concern to Swedish firms in 1996, lack of knowledge about derivatives within the firm, concerns Swedish firms little today.

Research limitations/implications

As with other survey research, a major caveat is that responses represents opinions. It cannot be verified that the opinions coincide with actions. Further research could improve on the understanding of firms derivatives use by including more detailed data, different time spans, and larger samples.

Originality/value

Provides evidence of the changes in the use of derivatives of Swedish firms.

Citation

Alkebäck, P., Hagelin, N. and Pramborg, B. (2006), "Derivative usage by non‐financial firms in Sweden 1996 and 2003: what has changed?", Managerial Finance, Vol. 32 No. 2, pp. 101-114. https://doi.org/10.1108/0307435061064189