The DOI matches its Crossref record; 38 of the 38 references it cites were found in a registry or an index.
The Real and Financial Implications of Corporate Hedging
Open accessAbstract
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.
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Cites
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FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCY
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ON THE PRICING OF CORPORATE DEBT: THE RISK STRUCTURE OF INTEREST RATES*
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Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?
Kaplan, S. N., & Zingales, L. (1997) · The Quarterly Journal of Economics · doi:10.1162/003355397555163 · Cited by 6,770
The Determinants of Firms' Hedging Policies
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Self-citationHow Does Financing Impact Investment? The Role of Debt Covenants
CHAVA, S., & ROBERTS, M. R. (2008) · The Journal of Finance · doi:10.1111/j.1540-6261.2008.01391.x · Cited by 2,068
Explaining the Rate Spread on Corporate Bonds
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Who Manages Risk? An Empirical Examination of Risk Management Practices in the Gold Mining Industry
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Agency, Information and Corporate Investment
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Cited by
Environmental externalities and cost of capital
Chava, S. (2014) · Management Science · doi:10.1287/mnsc.2013.1863 · Cited by 1,851
Political Connections and the Cost of Bank Loans
HOUSTON, J. F., JIANG, L., LIN, C., & MA, Y. (2014) · Journal of Accounting Research · doi:10.1111/1475-679x.12038 · Cited by 705
Self-citationProtection of trade secrets and capital structure decisions
Klasa, S., Ortiz-Molina, H., Serfling, M., & Srinivasan, S. (2018) · Journal of Financial Economics · doi:10.1016/j.jfineco.2018.02.008 · Cited by 448
Metadata
- Authors
- CAMPELLO, M., LIN, C., MA, Y., & ZOU, H.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 2011-09-21
- Volume
- 66
- Issue
- 5
- Pages
- 1615-1647
- ISSN
- 0022-1082 (ISSN-L)
- 1540-6261
- OpenAlex
- W3125831853
- Cited by
- 353
- References
- 38
- FWCI
- 66.36
- Type
- journal article
- Language
- en
- Open access
- green
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- CAMPELLO, M., LIN, C., MA, Y., & ZOU, H. (2011). The Real and Financial Implications of Corporate Hedging. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.2011.01683.x
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