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Why Hedge? Extent, Nature, And Determinants Of Derivative Usage In U.S. Municipalities, Saleha Khumawala, Ranasinghe, Tharindra, Claire J. Yan
Why Hedge? Extent, Nature, And Determinants Of Derivative Usage In U.S. Municipalities, Saleha Khumawala, Ranasinghe, Tharindra, Claire J. Yan
Research Collection School Of Accountancy
Using a hand-collected dataset of over 300 observations of large U.S. cities and counties, this paper investigates the extent, nature and determinants of derivatives usage in the municipal sector. Over half of our sample entities engage in derivative transactions and a vast majority of these transactions are intended to manage interest rate risk. Swaps, by far, are the most popular derivative instrument. In terms of the determinants of derivative usage, we find that the propensity to use derivatives as well as the extent of derivative usage is higher for municipalities that are larger and more financially constrained. We do not …
Analysts, Macroeconomic News, And The Benefit Of Active In-House Economists, Artur Hugon, Alok Kumar, An-Ping Lin
Analysts, Macroeconomic News, And The Benefit Of Active In-House Economists, Artur Hugon, Alok Kumar, An-Ping Lin
Research Collection School Of Accountancy
Although macroeconomic news has a major impact on corporate earnings, anecdotal evidence suggests that financial analyst research is inefficient with respect to such news. Examining analysts' earnings research, we find that they underreact to negative macroeconomic news. Analysts are not all equal, though, as analysts employed at the same firm as an active macroeconomist underreact much less. We find that the benefit of analyst access to an economist is concentrated in firms that are high in cyclicality relative to their industry, high in cyclicality in general, and that are smaller in size. In addition, analysts who are exposed to more …