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The Maturity Structure of Corporate Hedging: the Case of the U.S. Oil and Gas Industry

Mohamed Mnasri, Georges Dionne () and Jean-Pierre Gueyie

Cahiers de recherche from CIRPEE

Abstract: This paper investigates how firms design the maturity of their hedging programs, and the real effects of maturity choice on firm value and risk. Using a new dataset on hedging activities of 150 U.S. oil and gas producers, we find strong evidence that hedging maturity is influenced by investment programs, market conditions, production specificities, and hedging contract features. We also give empirical evidence of a non-monotonic relationship between hedging maturity and measures of financial distress. We further investigate the motivations of early termination of contracts. Finally, we show that longer hedging maturities could attenuate the impacts of commodity price risk on firm value and risk.

Keywords: Risk management; maturity choice; early termination; economic effects; oil and gas industry (search for similar items in EconPapers)
JEL-codes: D8 G32 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-ene and nep-rmg
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Citations: View citations in EconPapers (1)

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Working Paper: The maturity structure of corporate hedging: The case of the U.S. oil and gas industry (2013) Downloads
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