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Do entrepreneurs use cryptocurrency to hedge against their business risk?

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  • Bonaparte, Yosef

Abstract

This paper studies if entrepreneurs use cryptocurrency to hedge against business risk. Cryptocurrency is a newly emerging asset class that distinct from other traditional asset classes and less been analyzed from the entrepreneur's perspective. To implement the analyses, we address the endogeneity issue of being an entrepreneur using parents background and show that entrepreneurs prefer risk diversification hypotheses to hedge against their business risks.

Suggested Citation

  • Bonaparte, Yosef, 2024. "Do entrepreneurs use cryptocurrency to hedge against their business risk?," Finance Research Letters, Elsevier, vol. 62(PB).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pb:s1544612324002551
    DOI: 10.1016/j.frl.2024.105225
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    References listed on IDEAS

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    1. Jonathan Chiu & Thorsten V Koeppl, 2019. "Blockchain-Based Settlement for Asset Trading," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1716-1753.
    2. Lin William Cong & Zhiguo He, 2019. "Blockchain Disruption and Smart Contracts," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1754-1797.
    3. Bonaparte, Yosef, 2022. "Time horizon and cryptocurrency ownership: Is crypto not speculative?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 79(C).
    4. Selgin, George, 2015. "Synthetic commodity money," Journal of Financial Stability, Elsevier, vol. 17(C), pages 92-99.
    5. Raj Chetty & László Sándor & Adam Szeidl, 2017. "The Effect of Housing on Portfolio Choice," Journal of Finance, American Finance Association, vol. 72(3), pages 1171-1212, June.
    6. David Yermack, 2017. "Corporate Governance and Blockchains," Review of Finance, European Finance Association, vol. 21(1), pages 7-31.
    7. John Heaton & Deborah Lucas, 2000. "Portfolio Choice and Asset Prices: The Importance of Entrepreneurial Risk," Journal of Finance, American Finance Association, vol. 55(3), pages 1163-1198, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cryptocurrency and entrepreneurs; Entrepreneurs; Hedging against business risk;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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