Dynamic corporate risk management: Motivations and real implications
Jean-Pierre Gueyie and
Journal of Banking & Finance, 2018, vol. 95, issue C, 97-111
We investigate the dynamics of corporate hedging programs used by US oil producers and examine the effects of hedging maturity choice on firm value. We find evidence of a concave relationship between hedging maturity and the likelihood of financial distress and oil spot prices. We further investigate the motivations of the early termination of outstanding hedging contracts. Using the essential heterogeneity approach, we evaluate the causal effects of hedging maturity on firm value. Marginal firm value increases with short-term hedging maturity. The causal effects vary across oil producers with different hidden attributes.
Keywords: Hedging maturity; Early termination of contracts; Firm value; Marginal treatment effects; Essential heterogeneity models; Oil industry (search for similar items in EconPapers)
JEL-codes: D8 G32 (search for similar items in EconPapers)
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Working Paper: Dynamic Corporate Risk Management: Motivations and Real Implications (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:95:y:2018:i:c:p:97-111
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