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Effective derivative hedging and initial public offering long‐run performance
Author(s) -
Nguyen Hoa,
Liu MingHua
Publication year - 2014
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12036
Subject(s) - derivative (finance) , listing (finance) , sample (material) , initial public offering , business , population , currency , actuarial science , econometrics , accounting , monetary economics , economics , finance , medicine , environmental health , chemistry , chromatography
We investigate the role of corporate currency risk management through the use of financial derivatives in influencing the long‐run performance of a sample of A ustralian resources companies. We find that derivative users generally outperformed nonderivative users in the 5‐year period following listing. Effective derivative users consistently outperformed the nonhedgers. Furthermore, within the population of derivative users, effective derivative users tended to perform better than ineffective hedgers. Our results indicate that effective financial risk management plays a role in long‐run IPO performance.