descriptionPublicationkeyboard_double_arrow_right Article 01 Aug 2012 English Publisher:Informa UK LimitedJournal:Applied Economics Letters, volume 19, pages 1,149-1,152 (issn: 1350-4851, eissn: 1466-4291,

Authors: DaDalt, Peter J.; Lin, Bing Xuan; Lin, Chen Miao;

doi: 10.1080/13504851.2011.617677

Do derivatives affect the use of external financing?

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Abstract

We examine whether derivatives use reduces the utilization of external financing for a large sample of nonfinancial firms over the period 2002 to 2004. Using the measures of net external finance as discussed in Bradshaw et al. (2006), we find a negative association between corporate derivative use and the use of external financing. Further, we find the relationship is driven by differences in the use of debt, as opposed to equity financing.

Related Organizations

College of Business Administration
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Clayton State University
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University of Rhode Island
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Keywords

capital structure, 330, financing policy, derivatives, risk management

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