Risk efficiency of hedging strategy in China financial market

Guo, Haochen

doi:10.1016/j.pisc.2015.11.005

Cited by 1 publication

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“…Jin and Jordan (2006) [ 17 ] studied the hedging behavior of the financial derivatives of 119 oil and gas producers in the United States and found that hedging could reduce the sensitivity of a company’s stock price to petroleum and natural gas prices. Guo Fei and Wang Xiaoping wang (2009) [ 18 ] believed that a correct hedging strategy in a company could reduce the volatility of cash flow and reduce the likelihood of a fatal blow to the company from small probability events. Nguyen and Faff (2010) [ 19 ] took Australian listed companies as a sample and showed that the use of options to hedge business risks is not harmful to corporate value.…”

Section: Introductionmentioning

confidence: 99%

Large-scale sports events, sports gambling market and promotion risk management: Theoretical model and case analysis based on option hedging theory

2023

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Large-scale sports events have become a good opportunity for major enterprises to promote due to their high social attention; however, they also force enterprises to confront the risks of uncertainty and extreme loss. During the 2018 Russia World Cup, Vatti Co., Ltd.’s promotion activity “If France Wins, Get a Full Refund” suffered double losses economically and reputationally due to France’s victory and the company’s failure to fulfill its promise. This paper uses option hedging theory, and the risk management tools to construct a risk management model. Case analysis and program improvement were carried out. The research results show that using the winning odds can effectively control the risks. Companies should determine their promotion plan based on sale returns and the maximum implicit income generated by promotional activities. The research paper opens a new field using derivative financial instruments to control corporate promotion risks.

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Section: Introductionmentioning

confidence: 99%