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What drives financial hedging? A meta-regression analysis of corporate hedging determinants

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  • Geyer-Klingeberg, Jerome
  • Hang, Markus
  • Rathgeber, Andreas W.

Abstract

We examine the drivers of heterogeneity for the determinants of corporate hedging by applying meta-regression analysis on a sample of 175 primary studies. Taken all previous findings together, hedgers are large, profitable and geographically diversified firms with high capital expenditures and dividend payouts, large debt ratios, and low interest coverage. When breaking the effects down across different world regions, it becomes apparent that the importance of the hedging determinants varies and not all determinants have the same relevance in all geographical areas. Moreover, we find that the type of risk exposure, the source of the hedging data, the inclusion of relevant control variables, and the journal ranking of the publication outlet explain the variation in previous results. There is also evidence that accounting for endogeneity and operational hedging methods are responsible for differences in the reported findings. Researchers should be aware of these drivers of heterogeneity when comparing and interpreting empirical estimates for the hedging determinants obtained from different data and method selections.

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  • Geyer-Klingeberg, Jerome & Hang, Markus & Rathgeber, Andreas W., 2019. "What drives financial hedging? A meta-regression analysis of corporate hedging determinants," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 203-221.
  • Handle: RePEc:eee:finana:v:61:y:2019:i:c:p:203-221
    DOI: 10.1016/j.irfa.2018.11.006
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    Cited by:

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    More about this item

    Keywords

    Risk management; Derivatives; Non-financial companies; Quantitative review; Meta-analysis;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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