When entering balance sheet hedges, 63% of respondents say that they hedge
with maturities of three months or less, an outcome unchanged from 2009. Short-
term hedges are much more likely to be used by public and larger companies. For
example, 74% of public companies hedge with maturities of three months or less,
while private companies responded at a 56% rate for the same measure. Similarly,
68% of companies with revenues in excess of $500 million annually use hedges
with maturities of three months or less, whereas 56% of smaller companies hedge
with these maturities. Our inference is that public companies with larger revenues
have more robust methodologies for capturing exposures, allowing them to use
relatively short-term hedging programs that are adjusted frequently to “true-up”
hedges to exposures to neutralize the risk of balance sheet exposures.