Industry tournament incentives and corporate hedging policies

In this paper, we use survey data and data from annual reports to identify the determinants of hedging activity of United Kingdom (UK) firms in the context of an overall program of risk management. Comparing the two sets of data makes it possible to identify misclassified firms, that is, firms whose hedging claims are not consistent across the two data sets. Our results on the consistent data show that the likelihood of hedging is related to growth options, foreign currency exposure, liquidity and economies of scale in hedging costs. Contrary to many previous US studies, we also find strong evidence linking the decision to hedge and the expected costs of financial distress. Results for the misclassified firms suggest that they are actually hedgers that hedge less extensively than the correctly classified (CC) hedgers.

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Corporate Hedging, Investment, and Higher Moments of Stock Returns

SSRN Electronic Journal ◽

10.2139/ssrn.3978125 ◽

2021 ◽

Author(s):

Hitesh Doshi ◽

Praveen Kumar ◽

Virgilio Zurita

Keyword(s):

Stock Returns ◽

Higher Moments ◽

Corporate Hedging

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THE DETERMINANTS OF HEDGING AND FIRM VALUE: An Empirical Study in Mining Companies Listed on Indonesia Stock Exchange

Management and Economics Journal (MEC-J) ◽

10.18860/mec-j.v0i1.5017 ◽

2018 ◽

pp. 104

Author(s):

Garnis Irawanti

Keyword(s):

Logistic Regression ◽

Empirical Study ◽

Financial Distress ◽

Firm Value ◽

Stock Exchange ◽

T Test ◽

Corporate Hedging ◽

Determinant Factors ◽

Mining Companies ◽

Derivative Instruments

<p class="Keywords">This study aims to determine the determinant factors in the company's hedging decisions and to determine whether the activities of corporate hedging decisions through derivative instruments provide increased value for the company. The sample consisted of 33 mining companies listed on Indonesia Stock Exchange during 2011-2015 period. The method used in this study is logistic regression and independent sample t-test. The result of logistic regression by using variable of financial distress, underinvestment cost, and size showed a positive correlation to corporate hedging decision. Meanwhile, by using an independent sample t-test found that the company's hedging decisions significantly affect the value of firms and the companies with hedging decision activity through derivative instruments have more superior value than companies by using natural hedging decisions.</p><p> </p>

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