Extant theories suggest that managers may use hedging either to alleviate underinvestment problems caused by costly external financing or to promote overinvestment by circumventing the scrutiny of external capital markets. We empirically investigate this issue using a hand-collected dataset of...

Studies suggest that, pursuant to the implementation of SFAS 133, even sophisticated users of financial statements find it difficult to comprehend earnings implications of hedging derivatives. Moreover, due to stringent hedge accounting requirements under these standards, many economic hedges do...

Although prior literature has documented a positive association between business risk and audit fees, it remains unclear whether, in addition to expending greater audit effort on riskier clients, auditors also charge a risk premium. This is an important issue because a risk premium is a...