Purpose – The purpose of this paper is to examine the valuation effect of derivatives use in the French market using a sample of 250 non-financial firms over the period 2000-2002. Design/methodology/approach – The approach taken is application of linear regression framework and panel data...

Purpose – The purpose of this paper is to present an overview of weather derivatives markets and to highlight the importance of the contributing factors for weather risk management such as weather sensitivity, weather forecast, and economic growth. In this paper, the prospective of using...

Purpose – The purpose of this paper is to explore the roles of diversification, hedging, and a third risk-reduction process – “pacification” – in risk finance. Design/methodology/approach – After briefly reviewing the concepts of diversification and hedging, a simple mathematical...

Purpose – The paper aims to examine theoretically valuation of weather derivatives and their hedging roles in corporate risk management. Design/methodology/approach – The paper introduces an extended financial market model in which the weather risk is included as an independent random...

Purpose – The purpose of this paper is to examine various methods of payment and foreign-exchange risk management among firms involved in either export or import trade only, or both in Brunei Darussalam. The paper also seeks to delineate the relationship(s) between various characteristics of...

Purpose – The purpose of this paper is to identify the factors affecting firms' decision to use foreign exchange (FX) derivative instruments by using the data of 86 non-financial firms listed on Karachi Stock Exchange for the period 2004-2007. Design/methodology/approach – Required data were...

Purpose – The purpose of this paper is to explore the roles of diversification, hedging, and a third risk-reduction process – “pacification” – in risk finance. Design/methodology/approach – After briefly reviewing the concepts of diversification and hedging, a simple mathematical...

Purpose – The purpose of this paper is to find the optimal hedging strategy when an investor has budget constraints on both the initial capital and the future cash flow. Design/methodology/approach – The paper follows the utility minimization of the total cost, using convex utility functions...

Purpose – This paper aims to provide a comprehensive empirical assessment of major contemporary corporate hedging theories, i.e. financial theory, agency theory, stakeholder theory and new institutional economics. Design/methodology/approach – Hypotheses regarding the determinants of hedging...

Purpose – The purpose of this paper is to show that the duration-based hedge ratio has many serious defects: first, the yield-to-maturity is not the market interest rate, and it cannot even serve as a proxy for the market interest rate. Second, it is difficult to choose an appropriate bond for...