Hedging, exposure and rm value: A study of European and U.S. Airlines
Master thesis
Permanent lenke
http://hdl.handle.net/11250/2624751Utgivelsesdato
2019Metadata
Vis full innførselSamlinger
- Master of Science [1800]
Sammendrag
For several reasons, the airline industry is a reasonable industry to analyze the
relation between corporate risk exposure, hedging policy, and rm value. We ex-
plore the relationship between hedging, exposure, and rm value among European
and U.S. airlines. More speci cally, how di erences in strategy between Low-Cost
Carriers and Full-Service Airlines a ects this relationship, during the period Jan
1, 2010 { Dec 31, 2017. We analyze the relation between airlines fuel exposure
coe cients and the percentage of next year's fuel requirement hedged. We nd
evidence that hedging reduces exposure to fuel prices. Further, investgating the
relationship between hedging and rm value, we nd that hedging is associated
with higher rm value. However, we discover that di erences in strategy a ects
the hedging premium. Our results con rms that increased hedging activity in
periods of high exposure is not associated with higher rm value. Lastly, we
nd that alleviating the underinvestment problem appear not to be important in
explaining airlines hedging behavior.
Beskrivelse
Masteroppgave(MSc) in Master of Science in Finance - Handelshøyskolen BI, 2019