Financial Hedging, Corporate Cash Policy, and the Value of Cash

We study the implications of financial hedging for corporate cash policy and value holdings. Using a web crawler program to collect data on use derivatives between 1993 2016, we find that US public firms with programs have smaller reserves but higher than without contracts in place. Our empirical results are robust when controlling potential endogeneity issues, governance, regimes alternative measures Further, not only increases investment sensitivity internal cash, also has positive effect efficiency. The is more pronounced constraints, information asymmetry weaker governance. Collectively, our paper highlights importance as channel through which risk management firm value.