Managerial Stock Options and the Hedging Premium
Nordea Bank, Nordea Markets
University of Gothenburg - Department of Economics; Göteborg University - Centre for Finance; Hanken School of Economics
Stockholm University - School of Business
John D. Knopf
University of Connecticut - Department of Finance
August 31, 2004
Some studies have provided evidence that hedging increases firm value. Other studies have shown that managerial incentives may influence firm hedging. In this paper we provide evidence that hedging increases firm value, however, when hedging is based upon incentives caused by managers' options, firm value decreases.
Number of Pages in PDF File: 30
Keywords: Hedging, managerial incentives, firm value, risk management
JEL Classification: G32, F31working papers series
Date posted: September 2, 2004
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