Ederington showed that the optimal hedge ratio in most cases is significantly different from the traditional one-to-one ratio of futures to spot position holdings. He suggested that even pure risk minimizers should not hedge their entire spot portfolio but only a portion of it because minimum risk (i.e., variance) is achieved with a ratio of less than one-to-one.Franckle (1980) pointed out some errors in Ederington's study, among them that a two-week hedge of T-Bill futures was far more efficient than Ederington had shown. He extended Ederington's work by attempting to estimate the effects of changing maturities on the variance-minimizing hedge ratio in the T-Bill market, and found that by matching futures prices with the correct T-Bill prices the market could be shown to be much more effective than Ederington's results indicated. He also showed that a crucial assumption for using the model is a predetermined hedge period. Franckle indicated several reasons why the use of daily prices in a study of the futures market was superior to the use of weekly or monthly prices, such as Friday settlement. The most important among them is that the use of daily prices yields a higher estimate of the optimal hedge ratio and causes a larger reduction in the variance of the portfolio.

Annual financial reports, which all public corporations are legally required to publish, are the convential means of communication between managers of a firm (who act as agents) and the stockholders (owners) of the firm (who are the principals). These financial reports are also of great interest to other stakeholders in the firm, namely the employees of the firm, its suppliers, customers, bondholders, the investment community, and society at large. Through annual financial reports, management can disseminate information that reduces uncertainty about the firm in the minds of the stockholders: It reassures the employees and bondholders of the firm and suppliers to the firm that their economic stake in the company is secure. It allows the investment community to make forecasts about the future returns to investors from the firm's securities.

This research study employs a standard event-time methodology in an effort to assess the impact of consumer boycott initiation and termination announcements upon the wealth of stockholders of target firms. A major finding of the study is that consumer boycott announcements are followed by statistically significant decreases in the stock prices of the target firms. The results of the study also suggest that boycott termination announcements are associated with statistically significant wealth increases for these same firms. Policy implications of the finds are drawn for corporate financial managers.

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