Abstract
Using more than a decade of firm-level data on U.S. crude oil producers’ hedging portfolios, we document for the first time a strong positive link between a firms’ net worth and hedging. When subject to collateral constraints, firms face a trade-off between hedging and investment financing as both activities absorb collateral. Pledgeable collateral also impinges the extensive margin of risk management and we find a more limited use of linear derivative contracts when firms’ net worth increases.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
