The Evolution of the Use of Derivatives in Slovenian Non-Financial Companies

We investigate the evolution of corporate risk management practices in Slovenian non-financial firms in the period 2004–2009 and compare the findings several surveys conducted for other countries. We mail questionaires to non-financial companies, where the target group included non-financial companies listed on Ljubljana Stock Exchange and the largest exporting companies in Slovenia. We find that the current use of derivatives for hedging purposes is still at a lower level than in the majority of developed countries. The great expansion of Slovenian economy in the period 2004–2008, the development of Slovenian financial system, the convergence of Slovenian and EU accounting standards and recent financial crisis did not sufficiently induce Slovenian firms to adopt risk management practices. The most often stated reasons for the low use of derivatives are (1) insufficient risk exposure, (2) problems with the evaluation and monitoring of derivatives and (3) the costs associated with the implementation of derivatives programme. In our opinion, the institutional environment in Slovenia does not induce managers to undertake proper risk management activities. We argue that not only managers, but also owners and creditors should be more accountable for the decisions they take (or do not take).