Optimal Hedging Strategies and Interactions between Firms
Loss, Frédéric (2012), Optimal Hedging Strategies and Interactions between Firms, Journal of Economics and Management Strategy, 21, 1, p. 79-129
TypeArticle accepté pour publication ou publié
Journal nameJournal of Economics and Management Strategy
MetadataShow full item record
Abstract (EN)This paper studies corporate risk management in a context of financial constraints and imperfect competition in the product market. The paper shows that interactions between firms affect their hedging strategies. As a general rule, firms' hedging demands decrease with the correlation between their internal funds and investment opportunities. Moreover, when a firm's hedging demand is high in the case where investments are strategic substitutes, its hedging demand is low in the case where investments are strategic complements and vice versa.
Subjects / KeywordsFirm; Firms; Imperfect Competition; Investment
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