کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
884549 | 912398 | 2007 | 17 صفحه PDF | دانلود رایگان |
Financial hedging and corporate diversification are often considered substitutive means of risk management, implying that rapid development of financial hedging markets will yield less need for firms to manage risk through costly diversification. Building on a stakeholder-based view of risk management, we show that financial hedging and corporate diversification are more often complementary than substitutive. Financial hedging reduces a firm's systematic risk, encouraging firm-specific investment by stakeholders. Larger firm-specific investment loads excessive idiosyncratic risk on the stakeholders, increasing the benefits of reducing idiosyncratic risk through diversification. Therefore, financial hedging can increase a firm's incentives to manage risk through diversification.
Journal: Journal of Economic Behavior & Organization - Volume 62, Issue 4, April 2007, Pages 640–656