Why Do Firms Engage in Selective Hedging? Evidence From the Gold Mining Industry
By Tim R. Adam, School of Business and Economics, Humboldt University of Berlin; Chitru S. Fernando, Michael F. Price College of Business, University of Oklahoma; and Jesus M. Salas, College of Business & Economics, Lehigh University
As summarized by Hilary Till, Contributing Editor, Global Commodities Applied Research Digest
In this article, the authors find a counterintuitive result. While one might expect that firms with both an informational advantage and a robust financial condition to use these competitive advantages to vary their hedging programs according to their market views, the researchers, in fact, find the opposite result. This finding should be of interest to investors in gold equities, who should probably have a skeptical view regarding a firm’s decision to “selectively” hedge, which the authors also refer to as speculation.
Read Article