Abstract
We analyze how managerial risk preferences influence firms’ hedging instrument choice in the oil and gas industry. CEO age determines hedging behaviour: the probability of being a hedger as well as the use of linear hedging strategies decreases with CEO age. These findings are consistent with an argument that financial distress, which sends a negative signal of managerial ability, is relatively more costly to younger CEOs. We also investigate the vega-theory of hedging instrument choice, finding some support for a negative relationship between vega and a) the use of derivatives and b) hedging strategies that include the sale of call options.
| Lingua originale | Inglese |
|---|---|
| Titolo della pubblicazione ospite | N/A |
| Pagine | N/A |
| Stato di pubblicazione | Pubblicato - 2014 |
| Evento | FMA Europe 2014 - Maastricht Durata: 12 giu 2014 → 13 giu 2014 |
Convegno
| Convegno | FMA Europe 2014 |
|---|---|
| Città | Maastricht |
| Periodo | 12/6/14 → 13/6/14 |
Keywords
- CEO
- age
- hedging policy
- incentive