This paper investigates, theoretically and empirically, the impact of corporate hedging activities on firm value/performance. In a perfect market, with self-less management, aiming to maximise shareholder wealth, it may be expected that hedging would improve firm performance and add value. Our...

This paper uses a dataset that comprises information on 275 nonfinancial firms listed in the FTSE-All share index over the time period between 2005 and 2012, and reveals interesting features of the UK nonfinancial firms regarding the effect of hedging on firm value and performance. We show that...

Using a large panel of UK public firms, we examine the relationship between the financial risk hedging and the cost of equity capital. We hypothesize that firms utilizing financial derivative instruments reduce the stock return volatility which is priced in investors’ expectations. While...