Link your company's hedging to raising your stock price

Ashok Rao and John Edmunds

European Management Journal, 1998, vol. 16, issue 1, 63-69

Abstract: All companies hedge currency, interest rate, or commodity price exposure, using natural or contractual hedges. But traditional defensive hedging is restrictive and yet, greater flexibility appears to bring problems of control. Ashok Rao and John Edmunds solve this dilemma in a simple model which can be run on Microsoft Excel software. The model monitors a company's hedging on a daily basis, to measure how much each hedge is contributing to shareholder value, and to assess how much the set of hedges that are in place add to shareholder value. Various extensions of the model are possible.

Date: 1998
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