CORPORATE HEDGING AND SHAREHOLDER VALUE

2010/12/01 by Kevin Aretz, Söhnke M. Bartram · 1 citation
Business, Management and Accounting · #Risk Management in Financial Firms #Corporate Finance and Governance #Auditing, Earnings Management, Governance

paper · doi:10.1111/j.1475-6803.2010.01278.x

openalex publication_date 2010/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28

Abstract

Abstract Although theory suggests that corporate hedging can increase shareholder value in the presence of capital market imperfections, empirical studies show overall mixed support for rationales of hedging with derivatives. Although various empirical challenges and limitations advise some caution with regard to the interpretation of the existing evidence, the results are consistent with derivatives use being just one part of a broader financial strategy that considers the type and level of financial risks, the availability of risk management tools, and the operating environment of the firm. Moreover, corporations rely heavily on pass‐through, operational hedging, and foreign currency debt to manage financial risk.

Citations

• Currency and Interest-Rate Derivatives Use in US Firms
• On the Corporate Demand for Insurance: Evidence from the Reinsurance Market
• 1998 Wharton Survey of Financial Risk Management by US Non-Financial Firms
• The Pricing of Options and Corporate Liabilities
• Does Hedging Affect Firm Value? Evidence from the US Airline Industry
• The Determinants of Firms' Hedging Policies
• Agency Problems and the Theory of the Firm
• Theory of the firm: Managerial behavior, agency costs and ownership structure
• Are Firms Successful at Selective Hedging?*
• PORTFOLIO SELECTION*
• On the Corporate Demand for Insurance

Cited by

• International Evidence on Financial Derivatives Usage
• Derivative (finance) [wikipedia]