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Do Analysts Understand the Economic and Reporting Complexities of Derivatives?
Chang, Hye Sun - 2015
We investigate whether and how the complexity of derivatives influences analysts' earnings forecast properties. Using a difference-in-differences design, we find that, relative to a matched control sample of non-users, analysts' earnings forecasts for new derivatives users are less accurate and...
Persistent link: https://www.econbiz.de/10013032185
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Credit Default Swaps and Analyst Optimism
Govindaraj, Suresh - 2019
This paper investigates whether and how the initiation of Credit Default Swaps (CDS) trading affects analyst optimism. First, we document that analyst forecasts become less optimistic after the initiation of CDS trading. Second, we find that the dampening effect of CDS on analyst optimism is...
Persistent link: https://www.econbiz.de/10012889103
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Derivatives Use and Analysts’ Earnings Forecast Accuracy
Mefteh-Wali, Salma - 2012
This paper examines whether the use of derivatives improves firms' information environment, which is a relatively under-investigated research area in risk management literature. Using a sample of French non-financial listed firms, we show that firms which use derivatives enjoy high levels of...
Persistent link: https://www.econbiz.de/10013104379
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Investment Analysis under Equity Default Swaps with Asymmetric Information
Liu, Xiang - 2019
We assume an entrepreneur (borrower) must borrow money from a lender (bank) to start a project in a single-period model. The debt is secured by an insurer who takes the project and pays the lender all the outstanding principal and interest in case of default. The borrower grants the insurer a...
Persistent link: https://www.econbiz.de/10012860831
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Changing Post-Trading Arrangements for OTC Derivatives
Upper, Christian - 2013
The post-trading infrastructure of OTC derivatives markets has not always kept up with the rapid growth in trading volumes. Recent years have seen some initiatives that seek to introduce multilateral elements that facilitate flows of information between market participants while preserving the...
Persistent link: https://www.econbiz.de/10013095284
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On the determinants of derivative hedging by insurance companies : evidence from Taiwan
Shiu, Yung-ming; Wang, Chi-feng; Adams, Andrew; Shin, … - 2012
this study examines the determinants of derivative use for both life and non-life companies. The determinants are different … participate in derivative hedging activities. In the case of foreign exchange risk, the greater the exposure, the greater the … derivative holdings (as a proportion of the total assets of the firm). For the non-life sector, exposure to interest rate risk …
Persistent link: https://www.econbiz.de/10009699569
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Effects of SFAS 133 on the Risk Relevance of Accounting Measures of Banks’ Derivative Exposures
Ahmed, Anwer S. - 2012
We provide evidence on the effects of SFAS 133 on the risk relevance of accounting measures of bank derivative … classified as trading after SFAS 133. For these banks, trading derivative exposures offset non-derivative trading exposures to a … relevance of accounting measures of derivative exposures to bond investors and benefited banks in terms of reducing their cost …
Persistent link: https://www.econbiz.de/10013115557
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Continuation Call Options and the Sensitivity of Returns to Gains
Billings, Mary Brooke - 2012
Complementing prior literature that examines determinants of the sensitivity of returns to losses, we provide evidence that the sensitivity of returns to gains increases with firms' real continuation call options, i.e., their discretionary ability to continue operations, to make new investments,...
Persistent link: https://www.econbiz.de/10013100204
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Deriving the Free Cash Flow (FCF) for Firm Valuation - Why We Should Include the Change in Non-Operational Working Capital in the Net Working Capital Calculation When Deriving the...
Stockfis, Robert Richard - 2012
By excluding the change in non-operational working capital in calculating the net working capital for the FCF, analysts create a hypothetical or ‘virtual' cash flow. This may, or may not, be feasible given the firm's business plan, as funds may be earmarked for future capex, or other purposes....
Persistent link: https://www.econbiz.de/10013112481
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Derivatives Use and its Consequences for Management Earnings Forecasts
Campbell, John L. - 2020
This study examines whether firms' risk management policies (i.e., the use of derivatives to hedge firm risk) are associated with the frequency and informativeness of management earnings forecasts. We offer three main results. First, we find that management forecasts increase after firms begin...
Persistent link: https://www.econbiz.de/10012836655