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...

We develop a method to evaluate shareholder activism when an activist targets firms whose shareholders are diversified portfolio holders of possibly correlated firms. Our method of evaluation takes the portfolios of all of the shareholders, including the activist, as its basis of analysis. We...