CEO Age, Risk Incentives, and Hedging Strategy

Ettore Croci, Alfonso Del Giudice, Håkan Jankensgård

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)


We test if managerial preferences explain how firms hedge using hand-collected data on derivative portfolios in the oil and gas industry. How firms hedge involves choosing between linear contracts and put options, and deciding whether to finance these hedging positions with cash-on-hand or by selling call options. The likelihood of being a hedger increases with CEO age, and near-retirement CEOs prefer linear hedging instruments. The predictions of the managerial risk incentives-theory of hedging strategy, according to which managers with convex compensation schemes would avoid hedging strategies that cap upside potential, find no support in the data.
Original languageEnglish
Pages (from-to)686-716
Number of pages31
JournalFinancial Management
Publication statusPublished - 2017


  • CEO Age
  • Hedging policy
  • Risk-taking incentives

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