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How Does Corporate Governance Influence Hedging Strategy? An Empirical Study

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  • Lilia Rekik
  • Asmaa Alaoui Taib

Abstract

This paper investigates the influence of corporate governance on the choice of hedging instruments. Using a panel data of 370 firm-year observations from gold mining industry, we found that boards with a strong presence of institutional investors as directors were more likely to defend shareholders’ interests in decisions on how to hedge firm exposure. Results also indicated that firms whose managers had risk incentives induced by stock options were more likely to use insurance strategies (put options), while CEO equity ownership was positively correlated with linear hedging (forwards, spot-deferred contracts, and gold loans).

Suggested Citation

  • Lilia Rekik & Asmaa Alaoui Taib, 2018. "How Does Corporate Governance Influence Hedging Strategy? An Empirical Study," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(12), pages 115-115, December.
    • Handle: RePEc:ibn:ijefaa:v:10:y:2018:i:12:p:115
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    References listed on IDEAS

    as
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    4. Tufano, Peter, 1996. "Who Manages Risk? An Empirical Examination of Risk Management Practices in the Gold Mining Industry," Journal of Finance, American Finance Association, vol. 51(4), pages 1097-1137, September.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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