Capital expenditures, financial constraints, and the use of options

• 成果类型: Article
• 署名作者: Adam, Tim
• 署名单位: Humboldt University of Berlin; National University of Singapore
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.04.007
• 发表日期: 2009
• 页码: 238-251
• 关键词: Risk management; hedging; insurance; Instrument choice; speculation

摘要

This paper analyzes why gold mining firms use options instead of linear strategies to hedge their gold price risk. Consistent with financial constraints based theories, the largest and least financially constrained firms are the most likely to hedge with insurance strategies (Put options), while more constrained firms finance the purchase of puts by selling calls (collars). The most financially constrained firms use strategies that involve selling calls. Firms with large investment programs are also more likely to use insurance rather than linear strategies. Firms' hedging instrument choices are also correlated with current market conditions, suggesting that managers' market views partially drive hedging instrument choices. (C) 2009 Elsevier B.V. All rights reserved.