Title
Firm Risk Management Policies: Financial Hedging and Corporate Diversification
Publication Type
Conference Proceeding Article
Publication Date
2001
Abstract
Under what conditions will a firm engage in related or unrelated diversification to manage its risk exposures? Under what conditions will a firm use financial hedging markets to manage its risk exposures? Although it first appears that financial hedging and firm diversification may be substitutes in managing risks, this paper argues that is often not the case. Specifically, this paper develops a stakeholder theory of firm risk management and shows that financial hedging and diversification are more often complementary rather than substitutive means of risk management. Therefore, the introduction of financial hedging markets can increase the incentive for corporate diversification.
Keywords
risk management, finance mathematical models, hedging, diversification, risk exposure
Discipline
Finance and Financial Management | Strategic Management Policy
Research Areas
Strategy and Organisation
Publication
Academy of Management Proceedings
First Page
N1
Last Page
N6
ISSN
0065-0668
Identifier
10.5465/APBPP.2001.6132940
Publisher
Academy of Management
City or Country
Washington, DC, USA
Citation
WANG, Heli C. and LIM, Seongyeon.
Firm Risk Management Policies: Financial Hedging and Corporate Diversification. (2001). Academy of Management Proceedings. N1-N6. Research Collection Lee Kong Chian School Of Business.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/3445