File Download
Links for fulltext
(May Require Subscription)
- Publisher Website: 10.1111/j.1540-6261.2011.01683.x
- Scopus: eid_2-s2.0-80053087568
- WOS: WOS:000295098400005
- Find via
Supplementary
- Citations:
- Appears in Collections:
Article: The Real and Financial Implications of Corporate Hedging
Title | The Real and Financial Implications of Corporate Hedging |
---|---|
Authors | |
Issue Date | 2011 |
Citation | Journal Of Finance, 2011, v. 66 n. 5, p. 1615-1647 How to Cite? |
Abstract | We study the implications of hedging for corporate financing and investment. We do so using an extensive, hand-collected data set on corporate hedging activities. Hedging can lower the odds of negative realizations, thereby reducing the expected costs of financial distress. In theory, this should ease a firm's access to credit. Using a tax-based instrumental variable approach, we show that hedgers pay lower interest spreads and are less likely to have capital expenditure restrictions in their loan agreements. These favorable financing terms, in turn, allow hedgers to invest more. Our tests characterize two exact channels-cost of borrowing and investment restrictions-through which hedging affects corporate outcomes. The analysis shows that hedging has a first-order effect on firm financing and investment, and provides new insights into how hedging affects corporate value. More broadly, our study contributes novel evidence on the real consequences of financial contracting. © 2011 the American Finance Association. |
Persistent Identifier | http://hdl.handle.net/10722/188467 |
ISSN | 2023 Impact Factor: 7.6 2023 SCImago Journal Rankings: 19.139 |
SSRN | |
ISI Accession Number ID | |
References |
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Campello, M | en_US |
dc.contributor.author | Lin, C | en_US |
dc.contributor.author | Ma, Y | en_US |
dc.contributor.author | Zou, H | en_US |
dc.date.accessioned | 2013-09-03T04:07:45Z | - |
dc.date.available | 2013-09-03T04:07:45Z | - |
dc.date.issued | 2011 | en_US |
dc.identifier.citation | Journal Of Finance, 2011, v. 66 n. 5, p. 1615-1647 | en_US |
dc.identifier.issn | 0022-1082 | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/188467 | - |
dc.description.abstract | We study the implications of hedging for corporate financing and investment. We do so using an extensive, hand-collected data set on corporate hedging activities. Hedging can lower the odds of negative realizations, thereby reducing the expected costs of financial distress. In theory, this should ease a firm's access to credit. Using a tax-based instrumental variable approach, we show that hedgers pay lower interest spreads and are less likely to have capital expenditure restrictions in their loan agreements. These favorable financing terms, in turn, allow hedgers to invest more. Our tests characterize two exact channels-cost of borrowing and investment restrictions-through which hedging affects corporate outcomes. The analysis shows that hedging has a first-order effect on firm financing and investment, and provides new insights into how hedging affects corporate value. More broadly, our study contributes novel evidence on the real consequences of financial contracting. © 2011 the American Finance Association. | en_US |
dc.language | eng | en_US |
dc.relation.ispartof | Journal of Finance | en_US |
dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
dc.rights | This is the pre-peer reviewed version of the following article: [Journal Of Finance, 2011, v. 66 n. 5, p. 1615-1647], which has been published in final form at [http://dx.doi.org/10.1111/j.1540-6261.2011.01683.x]. Authors are not required to remove preprints posted prior to acceptance of the submitted version. | - |
dc.title | The Real and Financial Implications of Corporate Hedging | en_US |
dc.type | Article | en_US |
dc.identifier.email | Zou, H: hongzou@hku.hk | en_US |
dc.identifier.authority | Zou, H=rp01800 | en_US |
dc.description.nature | preprint | en_US |
dc.identifier.doi | 10.1111/j.1540-6261.2011.01683.x | en_US |
dc.identifier.scopus | eid_2-s2.0-80053087568 | en_US |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-80053087568&selection=ref&src=s&origin=recordpage | en_US |
dc.identifier.volume | 66 | en_US |
dc.identifier.issue | 5 | en_US |
dc.identifier.spage | 1615 | en_US |
dc.identifier.epage | 1647 | en_US |
dc.identifier.isi | WOS:000295098400005 | - |
dc.publisher.place | United States | en_US |
dc.identifier.ssrn | 1544048 | - |
dc.identifier.scopusauthorid | Campello, M=6603697614 | en_US |
dc.identifier.scopusauthorid | Lin, C=25630694300 | en_US |
dc.identifier.scopusauthorid | Ma, Y=7404701175 | en_US |
dc.identifier.scopusauthorid | Zou, H=48663306300 | en_US |
dc.identifier.issnl | 0022-1082 | - |