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...

Labor unemployment insurance reduces unemployment concerns. We argue that these benefitsmoderate incentives to smooth earnings to reduce employees' concerns about unemployment risk.Using exogenous variations in unemployment insurance benefits, we find evidence consistent withthis argument. We...