Asymmetric information and corporate derivatives use
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 lower as...
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| Veröffentlicht in: | The journal of futures markets 2002-03, Vol.22 (3), p.241-267 |
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| container_title | The journal of futures markets |
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| creator | Dadalt, Peter Gay, Gerald D. Nam, Jouahn |
| description | 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 lower asymmetric information. Specifically, for
firms using derivatives (notably currency derivatives) we find that analysts' earnings forecasts
have significantly greater accuracy and lower dispersion. These findings support the conjectures of DeMarzo and
Duffie (1995) and Breeden and Viswanathan (1998) who argue that hedging reduces noise related
to exogenous factors and hence decreases the level of asymmetric information regarding a firm's earnings.
© 2002 John Wiley & Sons, Inc. Jrl Fut Mark 22: 241–267, 2002 |
| doi_str_mv | 10.1002/fut.2216 |
| format | Article |
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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 lower asymmetric information. Specifically, for
firms using derivatives (notably currency derivatives) we find that analysts' earnings forecasts
have significantly greater accuracy and lower dispersion. These findings support the conjectures of DeMarzo and
Duffie (1995) and Breeden and Viswanathan (1998) who argue that hedging reduces noise related
to exogenous factors and hence decreases the level of asymmetric information regarding a firm's earnings.
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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 lower asymmetric information. Specifically, for
firms using derivatives (notably currency derivatives) we find that analysts' earnings forecasts
have significantly greater accuracy and lower dispersion. These findings support the conjectures of DeMarzo and
Duffie (1995) and Breeden and Viswanathan (1998) who argue that hedging reduces noise related
to exogenous factors and hence decreases the level of asymmetric information regarding a firm's earnings.
© 2002 John Wiley & Sons, Inc. Jrl Fut Mark 22: 241–267, 2002</description><subject>Asymmetric information</subject><subject>Asymmetry</subject><subject>Derivatives</subject><subject>Disclosure</subject><subject>Earnings</subject><subject>Economics</subject><subject>Enterprises</subject><subject>Finance</subject><subject>Financial performance</subject><subject>Forecasts</subject><subject>Foreign exchange rates</subject><subject>Hedging</subject><subject>Interest rates</subject><subject>Macroeconomics</subject><subject>Noise</subject><subject>Proxies</subject><subject>Risk exposure</subject><subject>Stockholders</subject><subject>Studies</subject><issn>0270-7314</issn><issn>1096-9934</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2002</creationdate><recordtype>article</recordtype><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><recordid>eNp10E9LwzAYBvAgCs4p-BGKB_HSmfRNk_U4hpvC_HPYJngJMU0gs21m0k737c2YCAqe3sP7S96HB6FzggcE4-zadO0gywg7QD2CC5YWBdBD1MMZxykHQo_RSQgrjHFRUNxDdBS2da1bb1ViG-N8LVvrmkQ2ZaKcXzsvW52U2ttNXGx0SLqgT9GRkVXQZ9-zjxaTm_n4Np09Tu_Go1mqABhLdUmoZorLV2qGHDCNJ3NSyhzAKClBxmgAikHMbVRuSMnL-IAaJrOizBn00eX-37V3750OrahtULqqZKNdFwQMgWHKeYQXf-DKdb6J2URGSBavYBLR1R4p70Lw2oi1t7X0W0Gw2HUnYndi112k6Z5-2Epv_3Vispj_9ja0-vPHS_8mGAeei-eHqZi-LJfzydO9WMIXIJ5-eA</recordid><startdate>200203</startdate><enddate>200203</enddate><creator>Dadalt, Peter</creator><creator>Gay, Gerald D.</creator><creator>Nam, Jouahn</creator><general>John Wiley & Sons, Inc</general><general>Wiley Periodicals Inc</general><scope>BSCLL</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>0U~</scope><scope>1-H</scope><scope>3V.</scope><scope>7WY</scope><scope>7WZ</scope><scope>7XB</scope><scope>87Z</scope><scope>8BJ</scope><scope>8FK</scope><scope>8FL</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>DWQXO</scope><scope>FQK</scope><scope>FRNLG</scope><scope>F~G</scope><scope>JBE</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>L.0</scope><scope>M0C</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>Q9U</scope></search><sort><creationdate>200203</creationdate><title>Asymmetric information and corporate derivatives use</title><author>Dadalt, Peter ; Gay, Gerald D. ; Nam, Jouahn</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c3366-ed14e6c7ab4f8730499451da533fcaa3a93433c63002fc5f1d7d4e64f6a29d563</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2002</creationdate><topic>Asymmetric information</topic><topic>Asymmetry</topic><topic>Derivatives</topic><topic>Disclosure</topic><topic>Earnings</topic><topic>Economics</topic><topic>Enterprises</topic><topic>Finance</topic><topic>Financial performance</topic><topic>Forecasts</topic><topic>Foreign exchange rates</topic><topic>Hedging</topic><topic>Interest rates</topic><topic>Macroeconomics</topic><topic>Noise</topic><topic>Proxies</topic><topic>Risk exposure</topic><topic>Stockholders</topic><topic>Studies</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Dadalt, Peter</creatorcontrib><creatorcontrib>Gay, Gerald D.</creatorcontrib><creatorcontrib>Nam, Jouahn</creatorcontrib><collection>Istex</collection><collection>CrossRef</collection><collection>Global News & ABI/Inform Professional</collection><collection>Trade PRO</collection><collection>ProQuest Central (Corporate)</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>ProQuest Central Korea</collection><collection>International Bibliography of the Social Sciences</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>International Bibliography of the Social Sciences</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Professional Standard</collection><collection>ABI/INFORM Global</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><jtitle>The journal of futures markets</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Dadalt, Peter</au><au>Gay, Gerald D.</au><au>Nam, Jouahn</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Asymmetric information and corporate derivatives use</atitle><jtitle>The journal of futures markets</jtitle><addtitle>J. Fut. Mark</addtitle><date>2002-03</date><risdate>2002</risdate><volume>22</volume><issue>3</issue><spage>241</spage><epage>267</epage><pages>241-267</pages><issn>0270-7314</issn><eissn>1096-9934</eissn><coden>JFMADT</coden><abstract>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 lower asymmetric information. Specifically, for
firms using derivatives (notably currency derivatives) we find that analysts' earnings forecasts
have significantly greater accuracy and lower dispersion. These findings support the conjectures of DeMarzo and
Duffie (1995) and Breeden and Viswanathan (1998) who argue that hedging reduces noise related
to exogenous factors and hence decreases the level of asymmetric information regarding a firm's earnings.
© 2002 John Wiley & Sons, Inc. Jrl Fut Mark 22: 241–267, 2002</abstract><cop>New York</cop><pub>John Wiley & Sons, Inc</pub><doi>10.1002/fut.2216</doi><tpages>27</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0270-7314 |
| ispartof | The journal of futures markets, 2002-03, Vol.22 (3), p.241-267 |
| issn | 0270-7314 1096-9934 |
| language | eng |
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| source | EBSCOhost Business Source Complete; Wiley Online Library All Journals |
| subjects | Asymmetric information Asymmetry Derivatives Disclosure Earnings Economics Enterprises Finance Financial performance Forecasts Foreign exchange rates Hedging Interest rates Macroeconomics Noise Proxies Risk exposure Stockholders Studies |
| title | Asymmetric information and corporate derivatives use |
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