代写范文

留学资讯

写作技巧

论文代写专题

服务承诺

资金托管
原创保证
实力保障
24小时客服
使命必达

51Due提供Essay,Paper,Report,Assignment等学科作业的代写与辅导,同时涵盖Personal Statement,转学申请等留学文书代写。

51Due将让你达成学业目标
51Due将让你达成学业目标
51Due将让你达成学业目标
51Due将让你达成学业目标

私人订制你的未来职场 世界名企,高端行业岗位等 在新的起点上实现更高水平的发展

积累工作经验
多元化文化交流
专业实操技能
建立人际资源圈

The corporate hedging

2019-05-10 来源: 51due教员组 类别: Essay范文

下面为大家整理一篇优秀的essay代写范文- The corporate hedging,供大家参考学习,这篇论文讨论了公司的套期保值。公司套期保值通过降低破产成本、昂贵的外部融资以及税收来提高公司价值。此外,公司套期保值还可以通过降低现金流的波动性来缓解投资不足问题,从而为公司增加价值。

corporate hedging,公司套期保值,essay代写,作业代写,代写

Futures contracts are one of the most common derivatives used to hedge risk.

It is an arrangement between two parties to buy or sell an asset at a predetermined price, and at a specified date in future. Although with a zero market value at inception, it can add value to the company. Recent research analyzes jet fuel hedging behavior of firms in the US airline industry and shows that airlines employing jet fuel hedging trade at a premium, after controlling for other factors impacting value (Carter, David & Rogers, 2006). Also in another study using Tobin’s Q as an approximation of a firm’s market valuation, Allayannis (2001) suggests a positive relationship between firm value and the use of foreign currency derivatives, and that the hedging premium is statistically and economically significant. These results provide evidence that hedging adds value to firms and the following paragraphs explain the reason.

First of all, hedging helps the firm stabilize its cash flow, thus ensures that a corporation has sufficient internal funds to take advantage of good investment opportunity. For instance, an airline company must plan years in advance for their aircraft purchase. In this case, hedging helps guarantee that the internal cash flow could meet future commitments to purchase an aircraft. Moreover, during recessions, it is not uncommon to find financially weak corporation selling assets. Airlines with sufficient internal cash flow may be in a position to buy these underpriced assets (e.g., Pulvino, 1998, 1999),which is definitely a profitable investment.

Secondly, hedging adds value to the company by reducing marginal financing costs.

Without proper hedging, firms may face cash shortages or surpluses from time to time.

In our imperfect capital markets, costs of external debt and financing arise because of various transaction costs. In other words, if internal cash flow is not sufficient to support investment expenditures, firms might have to bear possibly huge external financing costs, which will decrease the firm value.

Thirdly, hedging helps to reduce bankruptcy costs. Obviously, bankruptcy, and also the probability of future bankruptcy – creates substantial costs for the firm which have a negative impact on firm value (Smith & Stulz, 1985). These costs are not only incurred by the bankruptcy process, such as lawyer fees and accounting fees, but also from the fact that their customers and suppliers are no longer willing to do business with the company. However, with proper hedging locking in the future profit and reducing cash flow volatility, firms face a lower probability of default, thus preventing or reducing the bankruptcy costs.

Last but not least, corporate hedging may increase firm value by reducing the corporate tax burden. When firms face tax regimes where a higher tax rate applies as income increases (convex schedule), they can lower their tax burden through corporate hedging by reducing the volatility of pre-tax income (Graham & Smith, 1999).

In conclusion, corporate hedging enhances company value by reducing costs of bankruptcy, costly external financing, as well as taxes. Furthermore, corporate hedging can mitigate underinvestment problems through reducing the volatility of cash flows, consequently adding value to the company.

References

Allayannis, G. & Weston, J.P., 2001. The use of foreign currency derivatives and firm market value. Review of Financial Studies, 14(1), pp. 243-276.

Carter, D.A., Rogers, D.A. & Simkins, B.J., 2006. Does Hedging Affect Firm Value?

Evidence from the US Airline Industry. Financial Management, 35(1), pp. 53-86.

Froot, K., Scharfstein, D. & Stein, J., 1993. Risk management: Coordinating investment and financing policies. The Journal of Finance 48(5), pp. 1629-1658.

Graham, J.R. & Smith Jr., C.W., 1999. Tax incentives to hedge. The Journal of Finance. 54(6), pp. 2241-2262.

Pulvino, T.C., 1998. Do asset fire sales exist? An empirical investigation of commercial aircraft transactions. Journal of Finance 53(3), pp. 939-978.

Pulvino, T.C., 1999. Effects of bankruptcy court protection on asset sales. Journal of Financial Economics, 52(2), pp.151-186.

Smith, C. and Stulz, R. 1985. The determinants of firm’ hedging policies. Journal of Financial and Quantitative Analysis. 20(4), pp. 391-405.

51due留学教育原创版权郑重声明:原创essay代写范文源自编辑创作,未经官方许可,网站谢绝转载。对于侵权行为,未经同意的情况下,51Due有权追究法律责任。主要业务有essay代写、assignment代写、paper代写、作业代写服务。

51due为留学生提供最好的essay代写服务,亲们可以进入主页了解和获取更多essay代写范文 提供代写服务,详情可以咨询我们的客服QQ:800020041。

上一篇:The status of Chinese women 下一篇:A Proposal for “Friends” Servi