Are Corporations Reducing or Taking Risks with Derivatives?

By Ludger Hentschel, S. Kothari. Journal of Financial and Quantitative Analysis, 2001

376 citations recorded by the source corpus.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/5f4d810782c77da30630645cf87a0cbf94a0cebf

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Citations in the corpus

The Effects of Derivatives on Firm Risk and Value (2011, positive): “Hentschel and Kothari (2001) examine the risk characteristics of a panel of 425 large U.S. nonfinancial firms from 1991 to 1993.”
Compensation committee governance quality, chief executive officer stock option grants, and future firm performance (2009, background): “Hentschel and Kothari (2001) note that a relatively crude measure of the endogenous variable can be used as an instrumental variable because it is likely to capture the level of the variable but not the endogenously determined variations around those levels.”
Corporate investment and changes in GAAP (2016, neutral): “Therefore, although the within quintile variation in CUMU_EFF might be susceptible to managerial choice and thus endogenous, the between quintile variation in CUMU_EFF is not subject to managerial choice (Hentschel and Kothari 2001; Frankel et al. 2006).”
Determinants of the Informativeness of Analyst Research (2006, positive): “Toward this end, we follow Hentschel and Kothari (2001) in performing an instrumental variables regression that is equivalent to a two-stage least squares regression.”
The Effect of Compensation Committee Quality on the Association between CEO Cash Compensation and Accounting Performance (2009, methodology): “The principal-agent models predict that designing compensation contracts based on observable and enforceable performance measures including accounting numbers can align the incentives of the agent with those of the principal (Holmstrom, 1979). Based on agency theory, Lambert and Larcker (1987) analy”
How Firms Should Hedge (2001, neutral): “Stakeholders such as customers, suppliers, and employees may anticipate ̄nancial distress and therefore seek to reduce their long-term dependence on ̄rms with a high likelihood of (1)Research suggests that ̄rms are not systematically speculating with derivatives, see Hentschel and Kothari [22].”
Taking a View: Corporate Speculation, Governance, and Compensation (2007, background): “The average wealth deltas of the CEOs range from 457.85 for the firms that sometimes speculate to 718.38 for the firms that never speculate. The average wealth deltas of the CFOs are significantly lower. The average vegas of the CEOs range from 90.47 for the firms that never speculate to 123.42 for ”
CORPORATE HEDGING AND SHAREHOLDER VALUE (2010, background): “In particular, some studies report few, if any, differences in risk between derivatives users and non-users (Hentschel and Kothari, 2001), or a slight reduction in the risk of firms that initiate the use of derivatives (Guay, 1999).”
How Much Do Firms Hedge with Derivatives (2003, neutral): “…on the monthly change in the 6-month T-bill yield, the monthly percentage change in the Federal Reserve’s Nominal Major Currencies Dollar Index, and the monthly return on the CRSP value-weighted market index (for similar procedures, see Guay, 1999; Wong, 2000; and Hentschel and Kothari, 2001).”
Corporate hedging and speculation with derivatives (2017, background): “small, since the equity position as an option on the assets of the firm is relatively deep in the money (Hentschel and Kothari, 2001).”
Hedging Behavior in Small and Medium-Sized Enterprises: The Role of Unobserved Heterogeneity (2004, positive): “Hentschel and Kothari (2001) , and more recently Graham and Rogers (2002), show strong evidence of the association between leverage and derivative use.”
Do Analysts Understand the Economic and Reporting Complexities of Derivatives (2016, neutral): “However, some firms fail to hold effective hedges or intentionally speculate (e.g., Hentschel and Kothari 2001).”