Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
Using more than a decade of firm-level data on U.S. crude oil producers’ hedging portfolios, we document for the first time a strong positive link between a firms’ net worth and hedging. When subject to collateral constraints, firms face a trade-off between hedging and investment financing as both activities absorb collateral. Pledgeable collateral also impinges the extensive margin of risk management and we find a more limited use of linear derivative contracts when firms’ net worth increases.