How Firms Should Hedge

By K. Toft., Gregory K. Brown. 2001

160 citations recorded by the source corpus.

How researchers see this paper

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Offshore activities and financial vs operational hedging (2017, unknown): “…effective when demand uncertainty (quantity risk) is high (Chowdhry and Howe, 1998).2 The literature also suggests that dynamic hedging, which uses exotic derivatives and high frequency rebalancing, can hedge both price and quantity risk (Kroner and Sultan, 1993; Brown, 2001; Brown and Toft, 2002).”
CORPORATE HEDGING AND SHAREHOLDER VALUE (2010, background): “In fact, very little of the theory is developed at a sufficient level of detail to specify the particular hedging instrument that should be used (Bartram, 2006; Gay et al., 2003; Brown and Toft, 2002).”
Correlation in Energy Markets (2017, unknown): “2 Background and related literature The application of the approach proposed by Brown and Toft (2002) to energy markets was first done by Oum and Oren (2006).”
Hedging quantity risks with standard power options in a competitive wholesale electricity market (2006, background): “2 Brown and Toft [3] show that firms with the positive price-quantity correlation should hedge more in most price states to compensate for the increased exposure associated with the positive correlation than firms with the negative price–quantity correlation.”
The Real and Financial Implications of Corporate Hedging (2011, unknown): “In the presence of basis (unhedgeable) risk, a higher degree of asset volatility typically means less hedging (see Haushalter (2000) and Brown and Toft (2002)).”