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A review of the literature on commodity risk management

David A. Carter, Daniel A. Rogers, Betty Simkins and Stephen D. Treanor

Journal of Commodity Markets, 2017, vol. 8, issue C, 1-17

Abstract: This paper analyzes research on commodity risk management by nonfinancial firms and provides a review of the findings to date. We discuss the theories and methodologies used including the models best suited for examining commodity risk management and exposure. In this study, we review how the research to date provides evidence to the following questions. Is commodity risk reflected in share price behavior? Is the use of commodity risk management tools (derivatives) associated with reduced risk? Is there a relationship between the use of commodity risk management and the value of the firm? What other factors are important to commodity risk management? Suggestions are provided for future research in this area.

Keywords: Firm value; Hedging; Risk management; Risk exposure; Commodities (search for similar items in EconPapers)
JEL-codes: G32 L93 (search for similar items in EconPapers)
Date: 2017
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Journal of Commodity Markets is currently edited by Marcel Prokopczuk, Betty Simkins and Sjur Westgaard

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