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CORPORATE HEDGING AND SHAREHOLDER VALUE
Author(s) -
Aretz Kevin,
Bartram Söhnke M.
Publication year - 2010
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.2010.01278.x
Subject(s) - shareholder value , currency , business , shareholder , debt , capital structure , value (mathematics) , risk management , foreign exchange risk , empirical research , economics , financial economics , actuarial science , monetary economics , finance , corporate governance , philosophy , epistemology , machine learning , computer science
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.