Price Uncertainty and Corporate Value

@inproceedings{Haushalter2001PriceUA,
  title={Price Uncertainty and Corporate Value},
  author={David Haushalter and Randall A. Heron and Erik Lie},
  year={2001}
}
This study examines the sensitivity of equity values of oil producers to changes in the uncertainty of future oil prices. We document that this sensitivity is negatively correlated with a firm's debt ratio and its production costs. These results indicate that companies that are more likely to experience financial distress or underinvestment from low cash flows are adversely affected by increases in the uncertainty of future cash flows. We conclude that corporate risk management can increase… CONTINUE READING

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