Annual Conference

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Corporate Finance

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May 2024

Corporate Hedging, Contract Rights, and Basis Risk

Ilona BABENKO
A hedging contract can be terminated by a counterparty when a firm experiences an event of default, such as a credit downgrade, covenant violation, or bankruptcy. We build the model and show that counterparties are more likely to exercise their termination rights when a firm performs poorly and owes...
Keywords: hedging, risk management, derivatives, event of default, distress, basis risk, ISDA
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Annual Conference

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Accounting

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May 2016

Corporate Hedging and the Design of Incentive-Compensation Contracts

Christopher S. ARMSTRONG, Sterling HUANG, Stephen GLAESER
We use the introduction of exchange-traded weather derivative contracts as a natural experiment to examine the relation between risk and incentives. Specifically, we examine how executives’ ability to hedge weather-related risk that was previously difficult and costly to manage influences the desi...
Keywords: executive compensation, contract design, equity incentives, risk-taking incentives;
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2021

Corporate Foreign Bond Issuance and Interfirm Loans in China

Yi HUANG, Ugo PANIZZA, Richard PORTES
This paper uses firm-level data to document and analyze international bond issuance by Chinese non-financial corporations and the use of the proceeds of issuance. We find that dollar issuance is positively correlated with the differential between domestic and foreign interest rates. This interest ra...
Keywords: China, bond issuance in emerging market countries, carry trade, shadow banking
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2018

Corporate Default Risk and Loan Pricing Behavior in China

Hongyi CHEN, Jianghui CHEN, Gaofeng HAN
This paper studies banks’ loan pricing behaviour in mainland China from 2003-2013 by applying panel regressions to firm-level loan data and estimated default likelihood for listed companies. We find that, with the progress of market-oriented financial reforms, banks generally require compensation ...
Keywords: Default Risk, Bank Loan Pricing, SOE, Non-SOE, China
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2025

Corporate Debt, Boom-Bust Cycles, and Financial Crises

Victoria IVASHINA, Sebnem KALEMLI-OZCAN, Luc LAEVEN, Karsten MULLER
Using a new dataset on sectoral credit exposures covering financial and non-financial sectors in 115 economies over the period 1940–2014, we document the following evidence that corporate debt plays a key role in explaining boom-bust cycles, financial crises, and slow macroeconomic recoveries: (i)...
Keywords: Financial crises, banking crises, credit booms, corporate debt, household debt
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