Hedging or Market Timing? Selecting the Interest Rate Exposure of Corporate Debt

@article{Faulkender2001HedgingOM,
  title={Hedging or Market Timing? Selecting the Interest Rate Exposure of Corporate Debt},
  author={Michael W. Faulkender},
  journal={Journal of Finance},
  year={2001},
  volume={60},
  pages={931-962}
}
  • Michael W. Faulkender
  • Published 2001
  • Economics
  • Journal of Finance
  • This paper examines whether firms are hedging or timing the market when selecting the interest rate exposure of their new debt issuances. I use a more accurate measure of the interest rate exposure chosen by firms by combining the initial exposure of newly issued debt securities with their use of interest rate swaps. The results indicate that the final interest rate exposure is largely driven by the slope of the yield curve at the time the debt is issued. These results suggest that interest… CONTINUE READING
    262 Citations

    Figures and Tables from this paper

    Interest rate risk management and the mix of fixed and floating rate debt
    • 6
    • Highly Influenced
    • PDF
    Market timing of corporate debt issuance: prediction or reaction?
    • 3
    Interest rate risk management with debt issues: Evidence from Europe
    • 8
    • PDF
    Corporate Debt Issuance and the Historical Level of Interest Rates
    • 102
    Liquidity and Corporate Debt Market Timing
    • PDF
    How and why do small firms manage interest rate risk
    • 61
    • Highly Influenced
    • PDF

    References

    SHOWING 1-10 OF 47 REFERENCES
    On the Determinants of Corporate Hedging
    • 1,272
    The Maturity of Debt Issues and Predictable Variation in Bond Returns
    • 37
    • PDF
    The Maturity of Debt Issues and Predictable Variation in Bond Returns
    • 251
    • PDF
    Risk Management: Coordinating Corporate Investment and Financing Policies
    • 2,743
    • Highly Influential
    • PDF