CEO Entrenchment and Corporate Hedging: Evidence from the Oil and Gas Industry

What are the primary determinants of risk management by firms and what, in particular, is the role of managerial entrenchment and free cash flow agency costs? We examine these issues using a unique dataset with detailed quarterly data on hedging by upstream oil and gas firms during 1996-2008. The extent of risk management (hedging intensity) is positively related to factors that amplify entrenc…