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What drives financial hedging? A meta-regression analysis of corporate hedging determinants

Geyer-Klingeberg, Jerome, Markus Hang and Andreas W. Rathgeber

International Review of Financial Analysis, 2019, vol. 61, issue C, 203-221

Abstract: We examine the drivers of heterogeneity for the determinants of corporate hedging by applying meta-regression analysis on a sample of 175 primary studies. Taken all previous findings together, hedgers are large, profitable and geographically diversified firms with high capital expenditures and dividend payouts, large debt ratios, and low interest coverage. When breaking the effects down across different world regions, it becomes apparent that the importance of the hedging determinants varies and not all determinants have the same relevance in all geographical areas. Moreover, we find that the type of risk exposure, the source of the hedging data, the inclusion of relevant control variables, and the journal ranking of the publication outlet explain the variation in previous results. There is also evidence that accounting for endogeneity and operational hedging methods are responsible for differences in the reported findings. Researchers should be aware of these drivers of heterogeneity when comparing and interpreting empirical estimates for the hedging determinants obtained from different data and method selections.

Keywords: Risk management; Derivatives; Non-financial companies; Quantitative review; Meta-analysis (search for similar items in EconPapers)
JEL-codes: C83 G32 (search for similar items in EconPapers)
Date: 2019
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