Hedging can increase firm value by reducing the costs of agency conflicts between managers and shareholders.

Name: Hedging can increase firm value by reducing the costs of agency conflicts between managers and shareholders.
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Question

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Hedging can help align the incentives of managers with those of shareholders, reducing the likelihood of managers making decisions that benefit themselves at the expense of shareholders. This can lead to increased firm value.

Hedging Can Increase Firm Value by Reducing the Costs of Agency