MetadataShow full item record
PublisherOXFORD UNIV PRESS INC
CitationHeitor Almeida, Kristine Watson Hankins, Ryan Williams; Risk Management with Supply Contracts, The Review of Financial Studies, Volume 30, Issue 12, 1 December 2017, Pages 4179–4215, https://doi.org/10.1093/rfs/hhx051
JournalREVIEW OF FINANCIAL STUDIES
Rights© The Author 2017. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved.
Collection InformationThis item from the UA Faculty Publications collection is made available by the University of Arizona with support from the University of Arizona Libraries. If you have questions, please contact us at email@example.com.
AbstractPurchase obligations are forward contracts with suppliers and are used more broadly than traded commodity derivatives. This paper is the first to document that these contracts are a risk management tool and have a material impact on corporate hedging activity. Firms that expand their risk management options following the introduction of steel futures contracts substitute financial hedging for purchase obligations. Contracting frictions, such as bargaining power and settlement risk, as well as potential hold-up issues associated with relationship-specific investment, affect the use of purchase obligations in the cross-section, as well as how firms respond to the introduction of steel futures.
Note24 month embargo; published online: 25 May 2017.
VersionFinal accepted manuscript
SponsorsGARP Risk Management Research Award Program