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- Publisher Website: 10.1287/mnsc.2020.3579
- Scopus: eid_2-s2.0-85105342184
- WOS: WOS:000647192700027
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Article: Product Price Risk and Liquidity Management: Evidence from the Electricity Industry
Title | Product Price Risk and Liquidity Management: Evidence from the Electricity Industry |
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Authors | |
Keywords | electricity price volatility cash holdings weather volatility operating flexibility hedging |
Issue Date | 2021 |
Publisher | INFORMS. The Journal's web site is located at http://mansci.pubs.informs.org |
Citation | Management Science, 2021, v. 67 n. 4, p. v, 1993-2656, iii-iv How to Cite? |
Abstract | Product price risk is a potentially important factor for firms’ liquidity management. A natural place to evaluate the impact of this risk on liquidity management is the electricity industry, because producing firms face substantial price volatility in wholesale markets. Empirically, higher volatility of electricity prices leads to an increase in cash holdings, and this effect is robust to instrumenting for price risk using weather volatility. Cash increases more with price risk in firms using inflexible production technologies and those that cannot easily hedge electricity prices, indicating that operating flexibility and hedging are substitutes for liquidity management. |
Persistent Identifier | http://hdl.handle.net/10722/282484 |
ISSN | 2023 Impact Factor: 4.6 2023 SCImago Journal Rankings: 5.438 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Lin, C | - |
dc.contributor.author | Schmid, T | - |
dc.contributor.author | Weisbach, MS | - |
dc.date.accessioned | 2020-05-15T05:28:43Z | - |
dc.date.available | 2020-05-15T05:28:43Z | - |
dc.date.issued | 2021 | - |
dc.identifier.citation | Management Science, 2021, v. 67 n. 4, p. v, 1993-2656, iii-iv | - |
dc.identifier.issn | 0025-1909 | - |
dc.identifier.uri | http://hdl.handle.net/10722/282484 | - |
dc.description.abstract | Product price risk is a potentially important factor for firms’ liquidity management. A natural place to evaluate the impact of this risk on liquidity management is the electricity industry, because producing firms face substantial price volatility in wholesale markets. Empirically, higher volatility of electricity prices leads to an increase in cash holdings, and this effect is robust to instrumenting for price risk using weather volatility. Cash increases more with price risk in firms using inflexible production technologies and those that cannot easily hedge electricity prices, indicating that operating flexibility and hedging are substitutes for liquidity management. | - |
dc.language | eng | - |
dc.publisher | INFORMS. The Journal's web site is located at http://mansci.pubs.informs.org | - |
dc.relation.ispartof | Management Science | - |
dc.subject | electricity price volatility | - |
dc.subject | cash holdings | - |
dc.subject | weather volatility | - |
dc.subject | operating flexibility | - |
dc.subject | hedging | - |
dc.title | Product Price Risk and Liquidity Management: Evidence from the Electricity Industry | - |
dc.type | Article | - |
dc.identifier.email | Lin, C: chenlin1@hku.hk | - |
dc.identifier.email | Schmid, T: schmid@hku.hk | - |
dc.identifier.authority | Lin, C=rp01808 | - |
dc.identifier.authority | Schmid, T=rp02028 | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1287/mnsc.2020.3579 | - |
dc.identifier.scopus | eid_2-s2.0-85105342184 | - |
dc.identifier.hkuros | 309887 | - |
dc.identifier.volume | 67 | - |
dc.identifier.issue | 4 | - |
dc.identifier.spage | v, 1993 | - |
dc.identifier.epage | 2656, iii-iv | - |
dc.identifier.isi | WOS:000647192700027 | - |
dc.publisher.place | United States | - |
dc.identifier.issnl | 0025-1909 | - |