Financial Constraints, Competition, and Hedging in Industry Equilibrium
AbstractWe analyze the hedging decisions of firms, within an equilibrium setting that allows us to examine how a firm's hedging choice depends on the hedging choices of its competitors. Within this equilibrium some firms hedge while others do not, even though all firms are ex ante identical. The fraction of firms that hedge depends on industry characteristics, such as the number of firms in the industry, the elasticity of demand, and the convexity of production costs. Consistent with prior empirical findings, the model predicts that there is more heterogeneity in the decision to hedge in the most competitive industries. Copyright 2007 by The American Finance Association.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Finance Association in its journal The Journal of Finance.
Volume (Year): 62 (2007)
Issue (Month): 5 (October)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Rampini, Adriano A. & Sufi, Amir & Viswanathan, S., 2014. "Dynamic risk management," Journal of Financial Economics, Elsevier, vol. 111(2), pages 271-296.
- Fauver, Larry & Naranjo, Andy, 2010. "Derivative usage and firm value: The influence of agency costs and monitoring problems," Journal of Corporate Finance, Elsevier, vol. 16(5), pages 719-735, December.
- Kale, Jayant R. & Loon, Yee Cheng, 2011. "Product market power and stock market liquidity," Journal of Financial Markets, Elsevier, vol. 14(2), pages 376-410, May.
- Argenton, C. & Willems, Bert, 2010.
"Exclusion Through Speculation,"
2010-83, Tilburg University, Center for Economic Research.
- Léautier, Thomas-Olivier & Rochet, Jean-Charles, 2013. "On the strategic value of risk management," TSE Working Papers 13-433, Toulouse School of Economics (TSE).
- Ruprecht, Benedikt & Entrop, Oliver & Kick, Thomas & Wilkens, Marco, 2013.
"Market Timing, Maturity Mismatch, and Risk Management: Evidence from the Banking Industry,"
Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order
79733, Verein für Socialpolitik / German Economic Association.
- Ruprecht, Benedikt & Entrop, Oliver & Kick, Thomas & Wilkens, Marco, 2013. "Market timing, maturity mismatch, and risk management: Evidence from the banking industry," Discussion Papers 56/2013, Deutsche Bundesbank, Research Centre.
- Bartram, Söhnke M. & Brown, Gregory W. & Minton, Bernadette A., 2010.
"Resolving the exposure puzzle: The many facets of exchange rate exposure,"
Journal of Financial Economics,
Elsevier, vol. 95(2), pages 148-173, February.
- Bartram, Söhnke M. & Brown, Gregory W. & Minton, Bernadette, 2009. "Resolving the Exposure Puzzle: The Many Facets of Exchange Rate Exposure," MPRA Paper 14041, University Library of Munich, Germany.
- Luiz Rossi, José, 2013. "Hedging, selective hedging, or speculation? Evidence of the use of derivatives by Brazilian firms during the financial crisis," Journal of Multinational Financial Management, Elsevier, vol. 23(5), pages 415-433.
- Léautier, Thomas-Olivier & Rochet, Jean-Charles, 2013. "On the strategic value of risk management," IDEI Working Papers 797, Institut d'Économie Industrielle (IDEI), Toulouse.
- Broll, Udo & Wahl, Jack E., 2011. "Liquidity constrained exporters and trade," Economics Letters, Elsevier, vol. 111(1), pages 26-29, April.
- Vickery, James, 2008. "How and why do small firms manage interest rate risk," Journal of Financial Economics, Elsevier, vol. 87(2), pages 446-470, February.
- Madura, Jeff & Ngo, Thanh & Viale, Ariel M., 2012. "Why do merger premiums vary across industries and over time?," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(1), pages 49-62.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.