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 paper studies the interplay between firm investment and cash flow hedging decisions when the decision-maker has … time-inconsistent preferences. We show that cash flow hedging acts as a double-edged sword. In some cases, cash flow … hedging enhances firm value because the firm can thus invest at the firm-value-maximizing timing. In other cases, however …