Corporate Hedging, Financial Distress, and Product Market Competition

摘要: The paper investigates the relationship between corporate hedging and product market competition. Using a broad sample of multiple commodity-inputs industries over period 1994-2008, examines whether an unfavorable commodity shock has long term effect on unhedged firms. I find that firms which are ex ante financially constrained lose share experience decrease in profitability during shocks. effects persistent up to five years robust performance trend potential endogeneity. with financial advantages – unconstrained hedged tend increase advertising expenditures price-cost-margins negative shocks, indicating loss is due increased competition market. Furthermore, more likely exit than their rivals stronger concentrated higher leverage dispersion.