We examine whether managerial overconfidence can help explain the observed discrepancies between the theory and practice of corporate risk management. We use a unique dataset of corporate derivatives positions that enables us to directly observe managerial reactions to their (speculative) gains...

The literature on corporate risk management has traditionally assumed that derivative securities are fairly priced, and thus disregarded the possibility that non-financial firms might use derivatives to generate positive returns by exploiting market conditions. This premise has led researchers...

We document that firms in the gold mining industry have consistently realized economically significant cash flow gains from their derivatives transactions. We conclude that these cash flows have increased shareholder value since there is no evidence of an offsetting adjustment in firms'...

We document that firms in the gold mining industry have consistently realized economically significant cash flow gains from their derivatives transactions. We conclude that these cash flows have increased shareholder value since there is no evidence of an offsetting adjustment in firms'...

The widespread practice of managers speculating by incorporating their market views into firms' hedging programs (“selective hedging”) remains a puzzle. Using a 10-year sample of North American gold mining firms, we find no evidence that selective hedging is more prevalent among firms that...

We study the selective hedging puzzle, using data on the speculative activity of a sample of 92 North American gold mining firms, a setting that seems likely to satisfy the conditions stipulated by Stulz (1996) for shareholder value-maximizing selective hedging. Contrary to our predictions, we...

We find that aggregate net equity fund flows are strongly negatively correlated with changes in expected future stock market volatility as measured by the VIX. Implying that investor purchase decisions are primarily driven by returns and sale decisions by risk perceptions, we further find that...