The Assessment of Hedge Effectiveness

Cristina Bunea-Bontas

Economics and Applied Informatics, 2012, issue 1, 57-62

Abstract: Earnings volatility can be a significant source of concern for a company, putting pressure on its capital base and share price. Prudent management of the company’s exposure to different risks typically involves hedging solutions. Hedging is important for corporate risk management, involving reducing the exposure of the company to specific risks. The aim of this paper is to examine the basic requirements for assessing the hedge effectiveness, this being a vital stage in applying hedge accounting, that gives the possibility to assess if the companies match the timing of the gains and losses of hedged items and their hedging derivatives. The article identifies some difficulties encountered by companies and choices that they must make in assessing hedge effectiveness.

Keywords: Hedge accounting; Effectiveness; Hedge effectiveness (search for similar items in EconPapers)
JEL-codes: G11 M41 (search for similar items in EconPapers)
Date: 2012
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.ann.ugal.ro/eco/Doc2012.1/CristinaBuneaBontas.pdf (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:ddj:fseeai:y:2012:i:1:p:57-62

Access Statistics for this article

More articles in Economics and Applied Informatics from "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration Contact information at EDIRC.
Bibliographic data for series maintained by Gianina Mihai ().