What are the primary determinants of risk management by firms and what, in particular, is the role of managerial entrenchment and free cash flow agency costs? We examine these issues using a unique dataset with detailed quarterly data on hedging by upstream oil and gas firms during 1996-2008....

Building on the theoretical asset pricing literature, we examine the role of market risk and the size, book-to-market (BTM), and volatility anomalies in the cross-section of unlevered equity returns. Compared with levered (stock) returns, the unlevered market beta plays a more important role in...

Will corporations hedge even if risk management does not raise firm value? We address this question by examining theoretically and empirically the effects of CEO entrenchment and overinvestment on corporate hedging. Our theoretical analysis indicates that the avoidance of financial distress...

We theoretically and empirically analyze the effects of managerial agency on corporate hedging and risk management. Our theoretical analysis indicates that even risk neutral entrenched managers of unlevered firms will optimally establish costly hedging positions. Moreover, our model presents...