The Determinants of Off-Balance-Sheet Hedging in the Value-Maximizing Firm: an Empirical Analysis
Description:
The observed use (and indeed tremendous growth in volume) of forward contracts, futures, options, and swaps as hedges against interest rate risk, foreign exchange risk, and commodity price risk indicates that hedging does add value to the firm. The purpose this research was to empirically examine the value of off-balance-sheet hedging. The benefits of off-balance-sheet hedging were found to accrue from reducing (1) taxes, (2) expected financial distress costs, and (3) agency costs. Taxes. Hedgi…
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Date:
December 1988
Creator:
Nance, Deana R. (Deana Reneé)
Partner:
UNT Libraries