Premium
Managerial Ownership and Corporate Hedging
Author(s) -
Spanò Marcello
Publication year - 2007
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2007.02024.x
Subject(s) - incentive , hedge , risk aversion (psychology) , shareholder , business , position (finance) , enterprise value , shareholder value , value (mathematics) , work (physics) , microeconomics , corporate governance , economics , finance , financial economics , expected utility hypothesis , mechanical engineering , ecology , machine learning , computer science , engineering , biology
Using information on 443 UK non‐financial companies, this work provides evidence supporting the hypothesis that managerial risk aversion is an incentive to deviate from the optimal hedging position. Conflicts of interest between shareholders and managers are at the centre of the decision about the firm's risk profile but are not relevant as determinants of the decision to hedge. This is rather associated with factors enhancing the firm's expected value (underinvestment, scale economies, tax savings).