• Corpus ID: 42041989

M etallgesellschaft : A P rudent H edger R uined , or a W ildcatter on NYMEX ?

  title={M etallgesellschaft : A P rudent H edger R uined , or a W ildcatter on NYMEX ?},
  author={Stephen Craig Pirrong},
INTRODUCTION The travails of the firm Metallgesellschaft (MG) have received much attention in both academic circles and the financial press. The battle lines on the issue are clearly drawn. On one side, critics of MG [including Mello and Parsons, (1995)] claim that the firm’s energy market trading was rashly speculative, and as a result of adverse movements in oil prices, the firm suffered real mark-to-market losses of as much as one billion dollars. On the other side, defenders of the firm… 

Figures and Tables from this paper


At the start of 1994 Metallgesellschaft AG, the 14th largest corporation in Germany, stood on the brink of bankruptcy as a result of more than $1 billion in losses from trading in oil futures. The
Investment Under Uncertainty.
How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment
Risk Management: Coordinating Corporate Investment and Financing Policies
This paper develops a general framework for analyzing corporate risk management policies. We begin by observing that if external sources of finance are more costly to corporations than internally
Theory of Financial Decision Making
Based on courses developed by the author over several years, this book provides access to a broad area of research that is not available in separate articles or books of readings. Topics covered
Stochastic Convenience Yield and the Pricing of Oil Contingent Claims
This paper develops and empirically tests a two-factor model for pricing financial and real assets contingent on the price of oil. The factors are the spot price of oil and the instantaneous
The relation between forward prices and futures prices
Fundamentals and Volatility: Storage, Spreads, and the Dynamics of Metals Prices
The theory of storage implies that inventory and demand conditions affect (1) the variances and correlations of commodity spot and forward prices and (2) the spread between spot and forward prices.
Letter to the Editor
The Qualitative Methods newsletter is one year old, and the current issue takes on two challenging topics, field research and content/discourse analysis.
Testing for Nonlinear Dependence in Daily Foreign Exchange Rates
The purpose of this article is to investigate whether daily changes in five major foreign exchange rates contain any nonlinearities. Although the data contain no linear correlation, evidence