Derivatives Use and Analysts’ Earnings Forecast Accuracy

36 Pages Posted: 29 Jun 2012  

Salma Mefteh-Wali

ESSCA School of Management

Sabri Boubaker

Champagne School of Management (Groupe Esc Troyes); Institut de Recherche en Gestion (Université Paris Est Créteil)

Florence Labégorre

University of Lille I - Institute of Business Administration

Date Written: April 1, 2012

Abstract

This paper examines whether the use of derivatives improves firms’ information environment, which is a relatively under-investigated research area in risk management literature. Using a sample of French non-financial listed firms, we show that firms which use derivatives enjoy high levels of forecast accuracy relative to firms that do not. This result is in accord with the arguments developed by DeMarzo and Duffie (1995) and Breeden and Vishwanathan (1998) suggesting that hedging is an important means of reducing information asymmetry.

Keywords: Hedging, Derivatives use, Analysts’ forecasts, France

JEL Classification: F31, G32

Suggested Citation

Mefteh-Wali, Salma and Boubaker, Sabri and Labégorre, Florence, Derivatives Use and Analysts’ Earnings Forecast Accuracy (April 1, 2012). Frontiers in Finance and Economics, Vol. 9, No. 1, 51-86. Available at SSRN: https://ssrn.com/abstract=2096132

Salma Mefteh-Wali (Contact Author)

ESSCA School of Management ( email )

1 Rue Lakanal
Angers Cedex, 49003
France

Sabri Boubaker

Champagne School of Management (Groupe Esc Troyes) ( email )

217 avenue Pierre Brossolette BP 710
Troyes, Troyes 10002
France
+33 3 25 71 22 31 (Phone)
+33 3 25 49 22 17 (Fax)

HOME PAGE: http://www.groupe-esc-troyes.com

Institut de Recherche en Gestion (Université Paris Est Créteil) ( email )

61 Avenue du General de Gaulle
94010 Creteil
France

HOME PAGE: http://www.irg.u-pec.fr/enseignant.php?num=58

Florence Labégorre

University of Lille I - Institute of Business Administration ( email )

France

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