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The Association Between Firm Characteristics and the Use of a Comprehensive Corporate Hedging Strategy: An Ordered Probit Analysis

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  • Hue Hwa Au Yong, Robert Faff,Hoa Nguyen

    ()
    (University of Queensland, Australia)

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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Bibliographic Info

Article provided by SKEMA Business School in its journal Frontiers in Finance and Economics.

Volume (Year): 8 (2011)
Issue (Month): 1 (April)
Pages: 1-16

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Handle: RePEc:ffe:journl:v:8:y:2011:i:1:p:1-16

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Web page: http://www.ffe.esc-lille.com

Related research

Keywords: derivative use; coordinated corporate hedging strategy; ordered probit analysis;

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