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  • The Informativeness of Derivatives Use: Evidence from Corporate Disclosure through Public Announcements

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The Informativeness of Derivatives Use: Evidence from Corporate Disclosure through Public Announcements

Research output: Contribution to Journal/Magazine › Journal article › peer-review

E-pub ahead of print

Standard

The Informativeness of Derivatives Use: Evidence from Corporate Disclosure through Public Announcements. / Fernando, Chitru; Hoelscher, Seth; Raman, Vikas.
In: Journal of Banking and Finance, 11.01.2020.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Fernando, C, Hoelscher, S & Raman, V 2020, 'The Informativeness of Derivatives Use: Evidence from Corporate Disclosure through Public Announcements', Journal of Banking and Finance.

APA

Fernando, C., Hoelscher, S., & Raman, V. (2020). The Informativeness of Derivatives Use: Evidence from Corporate Disclosure through Public Announcements. Journal of Banking and Finance, Article 105731. Advance online publication.

Vancouver

Fernando C, Hoelscher S, Raman V. The Informativeness of Derivatives Use: Evidence from Corporate Disclosure through Public Announcements. Journal of Banking and Finance. 2020 Jan 11;105731. Epub 2020 Jan 11.

Author

Fernando, Chitru ; Hoelscher, Seth ; Raman, Vikas. / The Informativeness of Derivatives Use : Evidence from Corporate Disclosure through Public Announcements. In: Journal of Banking and Finance. 2020.

Bibtex

@article{616c0009de004713abdb78cf7b3ebfb0,
title = "The Informativeness of Derivatives Use: Evidence from Corporate Disclosure through Public Announcements",
abstract = "We provide new evidence on the determinants of corporate derivatives use by studying how markets respond to announcements of changes in derivatives positions by gold-mining firms. Announcements of increases or decreases in derivatives positions are associated with, respectively, negative or positive reactions in equity prices for both the announcing firm and other gold-mining firms, and, respectively, negative or positive reactions in the gold market. The reactions in the gold market and stock market (both firm and industry) are significantly more positive or negative, respectively, when firms explicitly state that they are decreasing or increasing derivatives positions due to changes in their market views of future gold prices. We help bridge an important gap in the literature by providing evidence consistent with some firms possessing credible private information that underlies changes in their derivatives positions, despite the absence of documented shareholder benefits created by firms that engage in selective hedging. Our findings also provide support for distress-cost minimization as a rationale for corporate derivatives use.",
author = "Chitru Fernando and Seth Hoelscher and Vikas Raman",
year = "2020",
month = jan,
day = "11",
language = "English",
journal = "Journal of Banking and Finance",
issn = "0378-4266",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - The Informativeness of Derivatives Use

T2 - Evidence from Corporate Disclosure through Public Announcements

AU - Fernando, Chitru

AU - Hoelscher, Seth

AU - Raman, Vikas

PY - 2020/1/11

Y1 - 2020/1/11

N2 - We provide new evidence on the determinants of corporate derivatives use by studying how markets respond to announcements of changes in derivatives positions by gold-mining firms. Announcements of increases or decreases in derivatives positions are associated with, respectively, negative or positive reactions in equity prices for both the announcing firm and other gold-mining firms, and, respectively, negative or positive reactions in the gold market. The reactions in the gold market and stock market (both firm and industry) are significantly more positive or negative, respectively, when firms explicitly state that they are decreasing or increasing derivatives positions due to changes in their market views of future gold prices. We help bridge an important gap in the literature by providing evidence consistent with some firms possessing credible private information that underlies changes in their derivatives positions, despite the absence of documented shareholder benefits created by firms that engage in selective hedging. Our findings also provide support for distress-cost minimization as a rationale for corporate derivatives use.

AB - We provide new evidence on the determinants of corporate derivatives use by studying how markets respond to announcements of changes in derivatives positions by gold-mining firms. Announcements of increases or decreases in derivatives positions are associated with, respectively, negative or positive reactions in equity prices for both the announcing firm and other gold-mining firms, and, respectively, negative or positive reactions in the gold market. The reactions in the gold market and stock market (both firm and industry) are significantly more positive or negative, respectively, when firms explicitly state that they are decreasing or increasing derivatives positions due to changes in their market views of future gold prices. We help bridge an important gap in the literature by providing evidence consistent with some firms possessing credible private information that underlies changes in their derivatives positions, despite the absence of documented shareholder benefits created by firms that engage in selective hedging. Our findings also provide support for distress-cost minimization as a rationale for corporate derivatives use.

M3 - Journal article

JO - Journal of Banking and Finance

JF - Journal of Banking and Finance

SN - 0378-4266

M1 - 105731

ER -