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Zsolt Bihary

is an associate professor of the Department of Finance at Corvinus University of Budapest (CUB). Prior to his recent position he worked as a researcher in physical chemistry, and as a financial modeler at Morgan Stanley. His research interest focuses on portfolio optimization, evolutionary finance, and financial networks.

Barbara Dömötör

is an assistant professor of the Department of Finance at Corvinus University of Budapest (CUB). She received her PhD in 2014 for her thesis modelling corporate hedging behaviour. Prior to her recent position she worked for several multinational banks treasury. Her research interest focuses on financial markets, financial risk management and financial regulation.

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Zsolt Bihary, Barbara Dömötör: How do manager incentives influence corporate hedging?

We explain the diversity of corporate hedging behavior in a single model. The hedging ratio is obtained by maximizing expected utility that is a combination of the corporate level utility and a component that models the incentives of the financial manager. We derive a theoretical model, and apply it for ex-post analysis of the corporate hedging decision. We investigate the effect of the manager’s utility based component on corporate value.

Last modified: 2018.11.30.