Hedging, Contract Enforceability, and Competition

• 成果类型: Article
• 署名作者: Giambona, Erasmo; Kumar, Anil; Phillips, Gordon M.
• 署名单位: Syracuse University; Aarhus University; Danish Finance Institute; Dartmouth College; National Bureau of Economic Research
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454; 1465-7368
• DOI: 10.1093/rfs/hhaf025
• 发表日期: 2025-07
• 页码: 2034-2087
• 关键词: D02; D43; G22; G28; G32; G33; RISK-MANAGEMENT; Financial distress; capital structure; life-insurance; Firm value; MARKET; INVESTMENT; debt; determinants

摘要

We study how risk management through hedging affects firms and competition among firms in the life insurance industry, an industry with over 7 trillion in assets and over 1,000 private and public firms. We examine firms after a staggered state-level reform that reduces the costs of hedging by granting derivatives superpriority in case of insolvency. We show that firms that are likely to face costly external finance increase hedging and reduce risk and the probability of receivership. Firms that are likely to face costly external finance also lower prices, increase policy sales, and increase their market share post-reform.