Does Corporate Hedging Enhance Shareholder Value? A Meta-Analysis

35 Pages Posted: 19 Dec 2018 Last revised: 21 Feb 2019

See all articles by Wolfgang Bessler

Wolfgang Bessler

Justus-Liebig-University Giessen

Thomas Conlon

University College Dublin

Xing Huan

University of Warwick - Accounting Group

Date Written: September 21, 2018


The theories underpinning corporate use of derivatives are well developed. Furthermore, there exist compelling economic reasons why hedging should lead to enhanced shareholder value, but empirical evidence in support of a substantial value increase from hedging is, at best, mixed. In this paper, we synthesize the empirical evidence for value enhancement in firms’ hedging with derivatives using a statistical meta-analysis combining data from 47 different studies. Our findings indicate that firms’ hedging with derivatives have larger Tobin’s Q, a commonly used measure of value creation. A variety of moderating variables are assessed, providing evidence of heterogeneity in the value relevance of corporate hedging. In particular, we find that relatively higher firm value is primarily associated with hedging of foreign exchange risk.

Keywords: Corporate Hedging, Derivatives, Firm Value, Meta Analysis

JEL Classification: G3, G32

Suggested Citation

Bessler, Wolfgang and Conlon, Thomas and Huan, Xing, Does Corporate Hedging Enhance Shareholder Value? A Meta-Analysis (September 21, 2018). International Review of Financial Analysis, Forthcoming, Michael J. Brennan Irish Finance Working Paper Series Research Paper No. 19-4, Available at SSRN: or

Wolfgang Bessler

Justus-Liebig-University Giessen ( email )

Center for Finance and Banking
Licher Strasse 74
Giessen, D-35394
49-641-9922460 (Phone)
49-641-9922469 (Fax)


Thomas Conlon (Contact Author)

University College Dublin ( email )

Smurfit Graduate Business School
Co. Dublin, n/a


Xing Huan

University of Warwick - Accounting Group ( email )

Warwick Business School
Coventry CV4 7AL
United Kingdom

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