Hedging, Financing and Investment Decisions
Posted: 24 Apr 2007
We empirically investigate the interactions among hedging, financing and investment decisions. We argue that the way in which hedging affects a firm's financing and investing decisions differs for firms with different growth opportunities. We find that high growth firms increase their investment, but not leverage, by hedging. However, we also find that firms with few investment opportunities use derivatives to increase their leverage.
Keywords: Hedging, risk management, investment, financing
JEL Classification: D84, G31, G32
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