Froot et al. [J. Finance 48 (1993) 1629] develop a framework in which a firm trades derivatives on the financial markets to coordinate its investing and financing decisions. This work specifies this framework by assuming that the firm faces a risk of going bankrupt. By deriving an approximated analytical solution, some properties of the optimal hedging strategy and the effects of hedging on a firm's investing and financing behaviour are developed and discussed. Numerical simulations of the nonclosed-form optimal solution are also obtained to validate the approximation.
|Data di pubblicazione:||2004|
|Titolo:||Determinants of Hedging and Its Effects on Investment and Debt|
|Rivista:||JOURNAL OF CORPORATE FINANCE|
|Digital Object Identifier (DOI):||10.1016/S0929-1199(02)00037-8|
|Codice identificativo ISI:||WOS:000188202700008|
|Parole Chiave:||hedging, investment, debt, bankruptcy costs, internal funds|
|Appare nelle tipologie:||Articolo su Rivista|