Optimal Hedging Strategies and Interactions between Firms

Frédéric Loss ()

Journal of Economics & Management Strategy, 2012, vol. 21, issue 1, 79-129

Abstract: This paper studies corporate risk management in a context of financial constraints and imperfect competition in the product market. The paper shows that interactions between firms affect their hedging strategies. As a general rule, firms’ hedging demands decrease with the correlation between their internal funds and investment opportunities. Moreover, when a firm’s hedging demand is high in the case where investments are strategic substitutes, its hedging demand is low in the case where investments are strategic complements and vice versa.

Date: 2012
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Citations: View citations in EconPapers (8)

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https://doi.org/10.1111/j.1530-9134.2011.00328.x

Related works:
Working Paper: Optimal hedging strategies and interactions between firms (2002)
Working Paper: Optimal Hedging Strategies and Interactions between Firms (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:21:y:2012:i:1:p:79-129

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