1 Finance Research Group, Aarhus School of Business, Aarhus BSS, Aarhus University2 Department of Management, Aarhus School of Business, Aarhus BSS, Aarhus University3 International Management and Control, Aarhus School of Business, Aarhus BSS, Aarhus University4 Department of Economics and Business Economics, Aarhus BSS, Aarhus University5 Department of Economics and Business Economics, Aarhus BSS, Aarhus University
Based on a cross-case study of Danish industrial companies the paper analyzes the benchmarking of the optimal hedging strategy. A stock market approach is pursued but a serious question mark is put on the validity of the obtained information seen from a corporate value-adding point of view. The conducted interviews show that empirical reasons behind actual hedging strategies vary considerably - some in accordance with mainstream finance theory, some resting on asymmetric information. The diversity of attitudes seems to be partly a result of different competitive environments, partly a result of practices and strategies that have been established in each company fairly independently over time. The paper argues that hedge benchmarks are useful in their creation process (by forcing a comprehensive analysis) as well as in their final status (by the establishment of a consistent hedging strategy and objective performance criteria).
Main Research Area:
The 7th Global Finance Conference, Chicago, USA, 2000