Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7414655 | The British Accounting Review | 2018 | 54 Pages |
Abstract
We relate derivatives usage to the level of corporate governance/monitoring mechanisms, managerial incentives and investment decisions of UK firms. We find evidence to suggest that the monitoring environment, e.g., board size, influences both currency and interest rate derivatives usage. Managerial compensation plans also influence derivatives usage. Investment decisions are affected by the governance and managerial compensation plans of firms, which in turn impact on derivatives usage. We find a strong tendency for UK firms to reduce derivatives usage in situations where derivatives usage should be increased. There is limited evidence that firms use hedging substitutes to avoid monitoring from external capital markets.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Jingjing Huang, Chen Su, Nathan L. Joseph, Dudley Gilder,