Hedging of financial risks by the Quebec SMF

This survey differs from previous studies of corporate hedging by concentrating on small and medium size firms (SMF) operating in Quebec, on account of their characteristics that distinguish them from the other Canadian SMF The study also innovates by, analyzing SMF use of derivatives in relation to their perceived concerns about financial risks, their knowledge of specific instruments, and the profiles of particular sub-groups identified using a cluster analysis. The survey covers 891 respondents and shows that 61% express concern relating to financial risks even though only 10% use hedging instruments to manage their risk. Respondents claim that the mainfactors restraining their use of derivative instruments are the high hedging costs relative to benefits, their lack of knowledge, and their limited accessibility to these instruments.