1 option
Risk Management: Coordinating Corporate Investment and Financing Policies / Kenneth A. Froot, David S. Scharfstein, Jeremy C. Stein.
- Format:
- Book
- Author/Creator:
- Froot, Kenneth A.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w4084.
- NBER working paper series no. w4084
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Risk Management
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1992.
- Summary:
- This paper develops a general framework for analyzing corporate risk management policies. We begin by observing that if external sources of finance are more costly to corporations than internally generated funds, there will typically be a benefit to hedging: hedging adds value to the extent that it helps ensure that a corporation has sufficient internal funds available to take advantage of attractive investment opportunities. We then argue that this simple observation has wide-ranging implications for the design of risk management strategies. We delineate how these strategies should depend on such factors as shocks to investment and financing opportunities. We also discuss exchange-rate hedging strategies for multinationals. as well as strategies involving "nonlinear" instruments like options.
- Notes:
- Print version record
- May 1992.
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