Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101020
Authors: 
Lin, Chen-miao
Smith, Stephen D.
Editors: 
Lin, Chen-miao
Smith, Stephen D.
Year of Publication: 
2005
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2005-5
Abstract: 
The purpose of this paper is to empirically investigate the interaction between hedging, financing, and investment decisions. This work is relevant in that theoretical predictions are not necessarily identical to those in the case where only two decisions are being made. We argue that the way in which hedging affects the firms’ financing and investing decisions differs for firms with different growth opportunities. We empirically find that high-growth firms increase their investment, but not their leverage, by hedging. However, we also find that firms with few investment opportunities use derivatives to increase their leverage.
Subjects: 
investment
financing
hedging
JEL: 
G31
G32
Document Type: 
Working Paper

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