We study a firm that justifies its novel use of equity derivatives as a cash-flow hedging strategy. Our purpose is to understand the challenge of translating risk management theory into managerial action. Cephalon Inc., a biotech firm, bought a large block of call options on its own stock. If...

We adapt the evolutionary stock market model from Evstigneev, Hens, Schenk-Hoppeacute; (2006) to a continuous time framework, where uncertainty in dividends is produced by a single Wiener process. The setup is therefore significantly different from Yang and Ewald (2008), who also study continuous...

The asset allocation of defined benefit pension plans is a setting where both risk shifting and risk management incentives are likely be present. Empirically, firms with poorly funded pension plans and weak credit ratings allocate a greater share of pension fund assets to safer securities such...

This work provides empirical evidence on the determinants of corporate hedging using nonsurvey data for UK companies. Data on hedging are obtained from disclosures made in financial statement footnotes by 443 companies subject to UK accounting rules. Evidence is consistent with hypotheses of...

We empirically examine the crucial relevance of financing variables in driving the long-lived capital spending by Tunisian firms. The theoretical underpinnings of external finance models encompass credit frictions and show that liquidity constraints highly drive the firm dynamics. We group the...

This paper examines alternative accrual accounting rules from an incentive and control perspective. For a range of common production, financing and investment decisions we consider alternative asset valuation rules. The criterion for distinguishing among these rules is that the corresponding...

Set in June 2001, the case places the student in the role of Scott Topping, Director of Corporate Finance at Southwest Airlines. Scott is responsible for the airline's fuel hedging program. The case describes the importance of jet fuel hedging in the airline industry, the volatility of jet fuel...

Commercial real estate makes up a relatively small percentage of most institutional portfolios, even though the existing literature has consistently reported attractive risk-return characteristics that would suggest much larger allocations. The discrepancy has been explained by a perceived lack...

We study how supply risk, fixed supplier costs, financial constraints, and the dual role played by the suppliers as the providers of parts and the financiers of the manufacturer affect the relationship among firms in a supply chain, supplier selection, and supply chain performance. Using a...