Corporate Hedging andProductivity Shocks: Implications onInvestment and Debt

Marcello Spano ()
Additional contact information
Marcello Spano: Department of Economics -University of Insubria, Italy.

International Journal of Business and Social Research, 2020, vol. 10, issue 4, 10-21

Abstract: This work compares two models of corporate hedging, to show how optimal investment, debt, and hedging strategy can be strongly dependent on the mechanism linking the firm’s internal funds to its return on investment. Approximated analytical solutions for hedging and a numerical example simulating the effects of a productivity shock are obtained to shed light on the different empirical implications associated to the two mechanisms. The latter appear to be distinguishable by observing the extent of hedging for equal values of the relevant parameters, and the correlation between investment and debt in a period of technological change.

Keywords: Hedging; Investment; Debt; Productivity. (search for similar items in EconPapers)
JEL-codes: G19 G31 G32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://thejournalofbusiness.org/index.php/site/article/view/1321/720 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lrc:larijb:v:10:y:2020:i:4:p:10-21

Access Statistics for this article

More articles in International Journal of Business and Social Research from LAR Center Press
Bibliographic data for series maintained by Al Hossain ().