IDEAS home Printed from https://ideas.repec.org/a/bla/finrev/v42y2007i2p191-209.html
   My bibliography  Save this article

Hedging, Financing and Investment Decisions: A Simultaneous Equations Framework

Author

Listed:
  • Chen‐Miao Lin
  • Stephen D. Smith

Abstract

We empirically investigate the interactions among hedging, financing, and investment decisions. We argue that the way in which hedging affects a firm's financing and investing decisions differs for firms with different growth opportunities. We find that high growth firms increase their investment, but not leverage, by hedging. However, we also find that firms with few investment opportunities use derivatives to increase their leverage.

Suggested Citation

  • Chen‐Miao Lin & Stephen D. Smith, 2007. "Hedging, Financing and Investment Decisions: A Simultaneous Equations Framework," The Financial Review, Eastern Finance Association, vol. 42(2), pages 191-209, May.
    • Handle: RePEc:bla:finrev:v:42:y:2007:i:2:p:191-209
    DOI: 10.1111/j.1540-6288.2007.00167.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1540-6288.2007.00167.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1540-6288.2007.00167.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jerome Geyer-Klingeberg & Markus Hang & Andreas W. Rathgeber & Stefan Stöckl & Matthias Walter, 2018. "What do we really know about corporate hedging? A meta-analytical study," Business Research, Springer;German Academic Association for Business Research, vol. 11(1), pages 1-31, February.
    2. Deng, Saiying & Elyasiani, Elyas & Mao, Connie X., 2017. "Derivatives-hedging, risk allocation and the cost of debt: Evidence from bank holding companies," The Quarterly Review of Economics and Finance, Elsevier, vol. 65(C), pages 114-127.
    3. Anthony Carroll & Fergal O'Brien & James Ryan, 2017. "An Examination of European Firms’ Derivatives Usage: The Importance of Model Selection," European Financial Management, European Financial Management Association, vol. 23(4), pages 648-690, September.
    4. Monda, Barbara & Giorgino, Marco & Modolin, Ileana, 2013. "Rationales for Corporate Risk Management - A Critical Literature Review," MPRA Paper 45420, University Library of Munich, Germany.
    5. Kuo‐Cheng Kuo & Wen‐Min Lu & Thanh Nhan Dinh, 2020. "Firm performance and ownership structure: Dynamic network data envelopment analysis approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 608-623, June.
    6. Nicola Benatti & Francesco Napolitano, 2019. "An insight into the derivatives trading of firms in the euro area," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Are post-crisis statistical initiatives completed?, volume 49, Bank for International Settlements.
    7. Dionne, Georges & El Hraiki, Rayane & Mnasri, Mohamed, 2022. "Determinants and real effects of joint hedging: An empirical analysis of the US petroleum industry," Working Papers 22-4, HEC Montreal, Canada Research Chair in Risk Management.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:finrev:v:42:y:2007:i:2:p:191-209. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/efaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.