The association between firm characteristics and the use of a comprehensive corporate hedging strategy : an ordered probit analysis

Hue Hwa Au Yong; Robert Faff; Hoa Nguyen

The association between firm characteristics and the use of a comprehensive corporate hedging strategy : an ordered probit analysis

Hue Hwa Au Yong
, Robert Faff
, Hoa Nguyen

Research output: Contribution to journal › Article › peer-review

Abstract

We investigate the potential factors that influence the corporate decision to collectively use foreign currency; interest rate; and commodity derivatives and foreign debt. Our Australian results show that firm size ('scale economies' hypothesis); leverage ('financial distress cost' hypothesis); and block holdings are positively associated with the comprehensive hedging decision, while executive shareholdings has a negative association. However, we do not find any support for the underinvestment or managerial risk aversion hypotheses.

Original language	English
Pages (from-to)	1-16
Number of pages	16
Journal	Frontiers in Finance & Economics
Volume	8
Issue number	1
Publication status	Published - 2011

Cite this

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abstract = "We investigate the potential factors that influence the corporate decision to collectively use foreign currency; interest rate; and commodity derivatives and foreign debt. Our Australian results show that firm size ('scale economies' hypothesis); leverage ('financial distress cost' hypothesis); and block holdings are positively associated with the comprehensive hedging decision, while executive shareholdings has a negative association. However, we do not find any support for the underinvestment or managerial risk aversion hypotheses.",

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AB - We investigate the potential factors that influence the corporate decision to collectively use foreign currency; interest rate; and commodity derivatives and foreign debt. Our Australian results show that firm size ('scale economies' hypothesis); leverage ('financial distress cost' hypothesis); and block holdings are positively associated with the comprehensive hedging decision, while executive shareholdings has a negative association. However, we do not find any support for the underinvestment or managerial risk aversion hypotheses.

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The association between firm characteristics and the use of a comprehensive corporate hedging strategy : an ordered probit analysis

Abstract

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