We examine how corporations should choose their optimal mix of linear and non-linear derivatives. We present a model in which a firm facing both quantity (output) and price (market) risk maximizes its expected profits when subject to financial distress costs. The optimal hedging position...

We examine analyst forecasts of 26 macroeconomic statistics over the August 1998 to March 2007 time period. We pose four research questions: (1) Does forecast accuracy persist?; (2) What are the determinants of such persistence?; (3) Do analysts who exhibit these characteristics make more...

The study examined analyst forecasts of 26 macroeconomic statistics for August 1998 through March 2007. The four research questions were, (1) Does forecast accuracy persist? (2) What are the determinants of such persistence? (3) Do analysts who exhibit these characteristics make more accurate...

We investigate analyst forecasts in a unique setting, the natural gas storage market, and study the contributions of analysts in facilitating price discovery in futures markets. Using a high frequency database of analyst storage forecasts, we show that the market appears to strongly condition...

We analyze the underinvestment problem as a determinant of corporate hedging policy. We find evidence of a positive relation between a firm?s derivatives use and its growth opportunities, as proxied by several alternative measures. For firms with enhanced investment opportunities, derivatives...

We investigate the relationship between derivatives use and the extent of asymmetric information faced by the firm. Using alternative analyst forecast proxies for asymmetric information, we find evidence that both the use of derivatives and the extent of derivatives usage is associated with...