Abstract

This paper investigates the influence of corporate governance on the choice of hedging instruments. Using a panel data of 370 firm-year observations from gold mining industry, we found that boards with a strong presence of institutional investors as directors were more likely to defend shareholders’ interests in decisions on how to hedge firm exposure. Results also indicated that firms whose managers had risk incentives induced by stock options were more likely to use insurance strategies (put options), while CEO equity ownership was positively correlated with linear hedging (forwards, spot-deferred contracts, and gold loans).

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