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<p>This study investigates the impact of corporate hedging as a tool of financial risk management on firm cost of public debt in U.S. public non-financial firms from 2001 to 2021. Using a panel data of 2,500 public non-financial firms and 4,859 bond-year observations in the U.S from 2001 to 2021, we find that corporate hedging during 2001–2021 leads to a reduction of 29.98 bps in corporate bond yield spreads. Interestingly, it causes an increase of 38.3 bps in corporate cost of debt during the crisis period from 2008 to 2010. The results are consistent across different credit ratings. There is evidence on the effect of macroeconomic conditions on the link between corporate hedging and firm cost of debt. This paper attempts to fill the gap in literature on the effect of corporate hedging and the components of corporate bond yield spreads as well as providing additional empirical assessment on how corporate hedging affects firm cost of debt financing during and after the financial crisis.</p>

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How does corporate hedging affect firms’ cost of public debt? evidence from U.S. non-financial firms before, during, and after the global financial crisis

  • 期刊论文

  • 发表日期：

    2026年6月26日

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  • Vu Tuan Chu,
  • Trang Lam Hanh Pham,
  • Hau Xuan Doan

摘要

This study investigates the impact of corporate hedging as a tool of financial risk management on firm cost of public debt in U.S. public non-financial firms from 2001 to 2021. Using a panel data of 2,500 public non-financial firms and 4,859 bond-year observations in the U.S from 2001 to 2021, we find that corporate hedging during 2001–2021 leads to a reduction of 29.98 bps in corporate bond yield spreads. Interestingly, it causes an increase of 38.3 bps in corporate cost of debt during the crisis period from 2008 to 2010. The results are consistent across different credit ratings. There is evidence on the effect of macroeconomic conditions on the link between corporate hedging and firm cost of debt. This paper attempts to fill the gap in literature on the effect of corporate hedging and the components of corporate bond yield spreads as well as providing additional empirical assessment on how corporate hedging affects firm cost of debt financing during and after the financial crisis.