Smith, Clifford W.; Stulz, René M. - In: Journal of Financial and Quantitative Analysis 20 (1985) 04, pp. 391-405
We develop a positive theory of the hedging behavior of value-maximizing corporations. We treat hedging by corporations simply as one part of the firm's financing decisions. We examine (1) taxes, (2) contracting costs, and (3) the impact of hedging policy on the firm's investment decisions as...
