Hedging and firm value:A literature review

This paper presented a comprehensive review of the extensive existing empirical literature that documenting overall mixed empirical support for rationales of hedging with derivatives at the firm level.It gave a systematic review and summary of the motive of hedging,the relationship between hedging and firm value,and the mechanisms of using derivatives to hedging.Moreover,most of dissertation shows that hedging is positively related to firm value.The innovation of this paper is to conduct on a sound analysis,and proposes further research directions,including the mechanisms and extent of hedging,the portfolio of hedging,further research of variables in empirical model and their relationship,as well as incorporating the costs and profits and losses of hedging into model as control variables.