Derivatives use and the value of cash holdings: Evidence from the U.S. oil and gas industry

Choi, Sanghak; Jang, Hyeonung; Kim, Daejin; Seo, Byoung Ki

doi:10.1002/fut.22173

Cited by 5 publications

(9 citation statements)

References 44 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…To further explore what derives the difference between our results and those of Choi et al . (2021), we restrict our sample to firms with SIC codes 1311, 1321, 1381, 1382 and 1389, the same as Choi et al . (2021).…”

Section: Resultsmentioning

confidence: 99%

“…(2021), we restrict our sample to firms with SIC codes 1311, 1321, 1381, 1382 and 1389, the same as Choi et al . (2021). Over the sample period 1998–2017, Choi et al .…”

Section: Resultsmentioning

confidence: 99%

“…Over the sample period 1998–2017, Choi et al . 's (2021) sample covers 155 unique firms and 1,364 firm‐year observations for their value‐of‐cash tests. However, over the similar sample period 1998–2016, we have 275 unique firms and 1,851 firm‐year observations.…”

Section: Resultsmentioning

confidence: 99%

“…Using the data on 155 US oil and gas producers during 1998-2017, Choi et al (2021) find that financial hedging reduces the value of cash. Panel B of Table 9 shows that financial hedging still has a positive and statistically significant effect on the value of cash in the Energy industry, which to additional corporate governance control variables, we re-estimate our baseline regressions using a sub-sample of firms with available corporate governance proxies, namely G-Index (Gompers, Ishii and Metrick, 2003), E-Index (Bebchuk, Cohen and Ferrell, 2009), motivated monitoring institutional ownership (Fich, Harford and Tran, 2015;Ward, Yin and Zeng, 2018) and blockholder ownership (Cumming et al, 2019;Edmans, 2014).…”

Section: Discussion Of Our Findings In Comparison With Previous Studiesmentioning

confidence: 99%

“…To further explore what derives the difference between our results and those of Choi et al (2021), we restrict our sample to firms with SIC codes 1311, 1321, 1381, 1382 and 1389, the same as Choi et al (2021). Over the sample period 1998-2017, Choi et al's (2021) sample covers 155 unique firms and 1,364 firm-year observations for their valueof-cash tests. However, over the similar sample period 1998-2016, we have 275 unique firms and 1,851 firm-year observations.…”

Section: Table 7 (Continued)mentioning

confidence: 99%

See 4 more Smart Citations

Financial Hedging, Corporate Cash Policy, and the Value of Cash

Sun

Yin

Zeng

2021

British J of Management

View full text Add to dashboard Cite

We study the implications of financial hedging for corporate cash policy and the value of cash holdings. Using a web crawler program to collect data on the use of financial derivatives between 1993 and 2016, we find that US public firms with financial hedging programs have smaller cash reserves but a higher value of cash than firms without hedging contracts in place. Our empirical results are robust when controlling for potential endogeneity issues, corporate governance, cash regimes and alternative measures of cash holdings. Further, we find that financial hedging not only increases the investment sensitivity to internal cash, but also has a positive effect on investment efficiency. The positive effect of financial hedging on the value of cash is more pronounced for firms with more financial constraints, higher information asymmetry and weaker corporate governance. Collectively, our paper highlights the importance of corporate cash policy as a channel through which financial risk management increases firm value.

show abstract

Section: Resultsmentioning

confidence: 99%

“…(2021), we restrict our sample to firms with SIC codes 1311, 1321, 1381, 1382 and 1389, the same as Choi et al . (2021). Over the sample period 1998–2017, Choi et al .…”

Section: Resultsmentioning

confidence: 99%

Section: Resultsmentioning

confidence: 99%