sensitivities are particularly intense for unconstrained firms with high hedging needs. Investment opportunities (as proxied by Q …), however, play a larger role for constrained firms with the effects being strongest in case of low hedging needs. Interestingly …, constrained firms with low hedging needs are found to employ more debt to finance their investment opportunities and build up …

This study is a review of literature for theoretical models that provides alternative rationales for corporate hedging … under imperfect market conditions. In models explained, corporate hedging is defined in three ways, as any insurance … value enhancing. Second, corporate hedging arises as a result of shareholder-manager conflict …