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Publication: Journal of Forest Products Business Research
Authors: 0
Reference ID: Volume 3, Article No. 5
Publish Year: 2006
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Title: Corporate Use of Derivatives for Hedging in the Forest Products Industry
The extent to which firms in the forest products industry use financial derivatives for hedging purposes remains undocumented in the forestry and finance literatures. This study provides evidence of derivatives-based hedging activity by forest products firms from the 2002 10-K filings of 19 U.S.- based, publicly traded forest products firms. These firms represented nearly $123 billion of the U.S. forest products industry as measured by revenues in 2002. While all 19 firms claim to use derivatives, 17 specify active derivative positions as of December 31, 2002. The total notional values – the face value – of these derivative contracts stood at $9.2 billion. Interest rate hedges –mostly in the form of swaps – accounted for 62 percent of these derivatives, with foreign currency and commodity derivatives accounting for 35 percent and 3 percent, respectively .

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