Bargaining Power and Risk Management

• Main Authors: Yu-Kai Chang, 張祐愷
• Other Authors: Vivian W. Tai
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/99581518601519497461

碩士 === 國立暨南國際大學 === 財務金融學系 === 102 === Using the sample of S&P 1500 American firms over the period from 2007 to 2012, this study analyze the relationship between bargaining power and corporate hedging decision, and examines whether the relationship between the corporate hedging aspiration/extent and bargaining power support bargaining power hypothesis or efficiency hypothesis. The evidence reveals that the bargaining power is significantly and negatively associated with hedging aspiration and hedging extent; the stronger bargaining power companies, the lower hedging aspiration and hedging extent, supporting the bargaining power hypothesis. After controlling the effect of market competition, the results are still valid. Further, grouping sample into high competitive market and low competitive market, the findings of the negative relationship between bargaining power and corporate hedging keep the same in high competitive market. In low competitive market, the results show that large companies with major customers have lower bargaining power, but they can transfer the effect to upstream suppliers to make earnings stable. Therefore, the big company in low competitive market will reduce the negative effect of the relationship between bargaining power and the demand of hedging, and even reverse from the negative relationship to positive. Finally, these results are robust to the consideration of endogeneity concerns, financial crisis period, and alternative measurement of hedge ratio.