Journal article
Price uncertainty and corporate value
Journal of corporate finance (Amsterdam, Netherlands), Vol.8(3), pp.271-286
07/01/2002
DOI: 10.1016/S0929-1199(01)00043-8
Abstract
This study examines the sensitivity of equity values of oil producers to changes in the uncertainty of future oil prices. We document that this sensitivity is negatively correlated with a firm's debt ratio and its production costs. These results indicate that companies that are more likely to experience financial distress or underinvestment from low cash flows are adversely affected by increases in the uncertainty of future cash flows. We conclude that corporate risk management can increase shareholder value by reducing the expected costs of financial distress and underinvestment.
Details
- Title: Subtitle
- Price uncertainty and corporate value
- Creators
- G.David Haushalter - Lundquist College of Business, University of Oregon, Eugene, OR 97403, USARandall A Heron - Indiana University – Purdue University IndianapolisErik Lie - William & Mary
- Resource Type
- Journal article
- Publication Details
- Journal of corporate finance (Amsterdam, Netherlands), Vol.8(3), pp.271-286
- Publisher
- Elsevier B.V
- DOI
- 10.1016/S0929-1199(01)00043-8
- ISSN
- 0929-1199
- eISSN
- 1872-6313
- Language
- English
- Date published
- 07/01/2002
- Academic Unit
- Finance
- Record Identifier
- 9984380417402771
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