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Limits to Arbitrage and Hedging : Evidence from Commodity Markets

Acharya, Viral V. - 2011

speculators are capital constrained, and commodity producers have hedging demands for commodity futures. Increases (decreases) in … producers' hedging demand (speculators' risk-capacity) increase hedging costs via price-pressure on futures, reduce producers … associated with producer hedging demand rises when speculative activity reduces. We conclude that limits to financial arbitrage …

Persistent link: https://www.econbiz.de/10012461784

A Transparency Standard for Derivatives

Acharya, Viral V. - 2011

Derivatives exposures across large financial institutions often contribute to - if not necessarily create - systemic risk. Current reporting standards for derivatives exposures are nevertheless inadequate for assessing these systemic risk contributions. In this paper, I explain how a...

Persistent link: https://www.econbiz.de/10012461100

Aggregate Risk and the Choice between Cash and Lines of Credit

Acharya, Viral V. - 2010

We argue that a firm's aggregate risk is a key determinant of whether it manages its future liquidity needs through cash reserves or bank lines of credit. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms with high aggregate risk find it costly to get...

Persistent link: https://www.econbiz.de/10012462534

Creditor rights and corporate risk-taking

Acharya, Viral V. - 2009

We analyze the link between creditor rights and firms' investment policies, proposing that stronger creditor rights in bankruptcy reduce corporate risk-taking. In cross-country analysis, we find that stronger creditor rights induce greater propensity of firms to engage in diversifying...

Persistent link: https://www.econbiz.de/10012463080

Climate Stress Testing

Acharya, Viral V.; Berner, Richard B.; Engle, Robert F.; … - National Bureau of Economic Research - 2023

We explore the design of climate stress tests to assess and manage macro-prudential risks from climate change in the financial sector. We review the climate stress scenarios currently employed by regulators, highlighting the need to (i) consider many transition risks as dynamic policy choices;...

Persistent link: https://www.econbiz.de/10014250115

Do Firms Mitigate Climate Impact on Employment? Evidence from US Heat Shocks

Acharya, Viral V.; Bhardwaj, Abhishek; Tomunen, Tuomas - National Bureau of Economic Research - 2023

How do firms mitigate the impact of rising temperatures on employment? Using establishment-level data, we show that firms operating in multiple counties in the United States respond to heat shocks by reducing employment in the affected locations and increasing it in unaffected locations, whereas...

Persistent link: https://www.econbiz.de/10014447288

Is Cash Negative Debt? A Hedging Perspective on Corporate Financial Policies

Acharya, Viral V. - 2005

firms will allocate excess cash flows into cash holdings if their hedging needs are high (i.e., if the correlation between … current debt if their hedging needs are low. The empirical examination of cash and debt policies of a large sample of … financially constrained firms with high hedging needs have a strong propensity to save cash out of cash flows, while showing no …

Persistent link: https://www.econbiz.de/10012467291

When do Treasuries Earn the Convenience Yield? : A Hedging Perspective

Acharya, Viral V.; Laarits, Toomas - National Bureau of Economic Research - 2023

We document that the convenience yield of U.S. Treasuries exhibits properties that are consistent with a hedging … inflation expectations that erode the hedging properties of U.S. Treasuries and other fixed-income money-like assets, inducing a …

Persistent link: https://www.econbiz.de/10014436994