Do Managers Exhibit Loss Aversion in Their Risk Management Practices? Evidence from the Gold Mining Industry

Tim R. Adam, Chitru S. Fernando and Evgenia Golubeva

Chapter 5 in Advances in Financial Risk Management, 2013, pp 105-124 from Palgrave Macmillan

Abstract: Abstract For years, hedging made Southwest Airlines Co. the most consistently profitable airline in the US. But included in its third-quarter earnings, released Thursday, was a $247 million accounting charge, which reflected the decline in the value of its hedges as the price of oil dropped during the quarter. The charge caused Southwest, which had a healthy operating profit, to post a quarterly net loss for the first time in 17 years. ‘Southwest is looking for opportunities to “de-hedge” some of its fuel,’ Gary Kelly, the airline’s chief executive, said Thursday. ‘Low fuel prices are a good thing … and an opportunity that we’ll want to take the best advantage of that we can.’ Wall Street Journal, ‘Fuel Hedges Cloud Airline Results,’ 17 October 2008.

Keywords: Gold Mining; Loss Aversion; Hedging Strategy; Gold Price; Mental Accounting (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-02509-8_5

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DOI: 10.1057/9781137025098_5

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