Risk Management with Supply Contracts

• 成果类型: Article
• 署名作者: Almeida, Heitor; Hankins, Kristine Watson; Williams, Ryan
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; University of Kentucky; University of Arizona
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhx051
• 发表日期: 2017
• 页码: 4179
• 关键词: trade credit; corporate-investment; vertical integration; liquidity; MARKETS; FIRMS; determinants; policies; incentives; providers

摘要

Purchase obligations are forward contracts with suppliers and are used more broadly than traded commodity derivatives. This paper is the first to document that these contracts are a risk management tool and have a material impact on corporate hedging activity. Firms that expand their risk management options following the introduction of steel futures contracts substitute financial hedging for purchase obligations. Contracting frictions, such as bargaining power and settlement risk, as well as potential hold-up issues associated with relationship-specific investment, affect the use of purchase obligations in the cross-section, as well as how firms respond to the introduction of steel futures.