Does hedging affect firm value? Evidence from the US airline industry. From: Financial Management | Date: March 22, 2006| Author: Carter, David A.; Rogers, Daniel A.; Simkins, Betty J. | COPYRIGHT 2006 Financial Management Association. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group.Copyright information

Does hedging add value to the firm, and if so, is the source of the added value consistent with hedging theory? We investigate jet fuel hedging behavior of firms in the US airline industry during 1992-2003 to examine whether such hedging is a source of value for these companies. We illustrate that the investment and financing climate in the airline industry conforms well to the theoretical framework of Froot, Scharfstein, and Stein (1993). In general airline industry investment opp...

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