Bartram, Söhnke M., Brown, Gregory W. and Fehle, Frank R.. (2009) International evidence on financial derivatives usage. Financial Management , Vol.38 (No.1). pp. 185-206. ISSN 0046-3892

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Abstract

Theory predicts that nonfinancial corporations might use derivatives to lower financial distress costs, coordinate cash flows with investment, or resolve agency conflicts between managers and owners. Using a new database, we find that traditional tests of these theories have little power to explain the determinants of corporate derivatives usage. Instead, we show that derivative usage is determined endogenously with other financial and operating decisions in ways that are intuitive but not related to specific theories for why firms hedge. For example, derivative usage helps determine the level and maturity of debt, dividend policy, holdings of liquid assets, and international operating hedging.

Item Type:	Journal Article
Subjects:	H Social Sciences > HG Finance
Divisions:	Faculty of Social Sciences > Warwick Business School > Finance Group Faculty of Social Sciences > Warwick Business School
Journal or Publication Title:	Financial Management
Publisher:	Wiley-Blackwell Publishing, Inc.
ISSN:	0046-3892
Date:	2009
Volume:	Vol.38
Number:	No.1
Number of Pages:	22
Page Range:	pp. 185-206
Identification Number:	10.1111/j.1755-053X.2009.01033.x
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access
URI:	http://wrap.warwick.ac.uk/id/eprint/44728

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