Do firms hedge in response to tax incentives?

• 成果类型: Article
• 署名作者: Graham, JR; Rogers, DA
• 署名单位: Duke University; Portland State University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/1540-6261.00443
• 发表日期: 2002
• 页码: 815-839
• 关键词: INTEREST-RATE SWAPS; risk management; capital structure; EMPIRICAL-EXAMINATION; AGENCY COSTS; corporate; derivatives; determinants; INVESTMENT; policies

摘要

There are two tax incentives for corporations to hedge: to increase debt capacity and interest tax deductions, and to reduce expected tax liability if the tax function is convex. We test whether these incentives affect the extent of corporate hedging with derivatives. Using an explicit measure of tax function convexity, we find no evidence that firms hedge in response to tax convexity. Our analysis does, however, indicate that firms hedge to increase debt capacity, with increased tax benefits averaging 1.1 percent of firm value. Our results also indicate that firms hedge because of expected financial distress costs and firm size.