Hedging, Financing and Investment Decisions

Posted: 24 Apr 2007

Abstract

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

Suggested Citation

Lin, Chen-Miao and Smith, Stephen Dewitt, Hedging, Financing and Investment Decisions. Financial Review, Vol. 42, No. 2, May 2007. Available at SSRN: https://ssrn.com/abstract=982225

Chen-Miao Lin (Contact Author)

Clayton State University ( email )

2000 Clayton State Boulevard
Morrow, GA 30260
United States

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