This paper examines the influence of institutional differences on risk management practices in the US and
the Netherlands. This comparison is interesting because the Dutch firms' institutional setting differs from
the US setting with respect to shareholder orientation, international trade, disclosure regulation, and
reliance on financial markets. In contrast with previous comparisons, we apply a matching and weighting
strategy that corrects for differences over industry and size classes across the Dutch and US samples.
After these corrections, the remaining results can be attributed more directly to institutional differences.
We find that due to the greater openness of the Netherlands, Dutch firms hedge more financial
risk, especially more currency risk, than US firms. Dutch firms, however, show a lower level of concern
over derivatives usage, which is consistent with having less active minority shareholders and less strict
disclosure requirements than the US has. Dutch firms focus le ss on stabilizing accounting earnings with
derivatives than US firms, which is likely attr
