Table 6 Hedging and the negative impact...

Table 6

Hedging and the negative impact of (low) financial reporting quality on investment

	[1]		[2]		[3]		[4]
	coef	t	coef	t	coef	t	coef	t
hedge	0.536*	(1.76)	0.609	(1.53)	0.521*	(1.67)	0.517*	(1.73)
EQ1	0.208	(0.24)
EQ1_hedge	9.070*	(1.92)
EQ2			−1.001	(−0.63)
EQ2_hedge			6.435	(1.00)
EQ3					1.498**	(2.28)
EQ3_hedge					6.073*	(1.93)
EQ4							1.022	(1.55)
EQ4_hedge							8.151**	(2.21)
institutions	0.860***	(4.14)	0.910***	(4.09)	0.884***	(4.21)	0.877***	(4.23)
analysts	0.040***	(4.86)	0.040***	(4.71)	0.040***	(4.86)	0.040***	(4.85)
gindex	0.004	(0.16)	−0.001	(−0.04)	0.005	(0.20)	0.004	(0.17)
gdummy	0.263	(1.04)	0.306	(1.19)	0.242	(0.96)	0.249	(0.99)
logasset	−0.316***	(−6.40)	−0.318***	(−6.19)	−0.313***	(−6.37)	−0.314***	(−6.34)
MB	0.815***	(13.83)	0.810***	(13.22)	0.809***	(13.77)	0.809***	(13.75)
stdcfo	3.843***	(4.68)	4.785***	(4.67)	3.653***	(4.37)	3.664***	(4.38)
stdsales	−0.344	(−1.13)	−0.247	(−0.70)	−0.408	(−1.35)	−0.397	(−1.34)
stdInvest	0.006**	(1.99)	0.005	(1.63)	0.006**	(2.04)	0.006**	(2.02)
zscore	0.344***	(5.67)	0.342***	(5.34)	0.341***	(5.62)	0.338***	(5.57)
tangibility	15.237***	(21.37)	15.119***	(20.89)	15.171***	(21.29)	15.280***	(21.18)
indK	−4.364***	(−6.28)	−4.121***	(−6.00)	−4.340***	(−6.25)	−4.351***	(−6.26)
cfosale	0.202***	(2.74)	0.217***	(2.85)	0.199***	(2.69)	0.202***	(2.74)
slack	−0.001***	(−4.61)	−0.001***	(−4.77)	−0.001***	(−4.53)	−0.001***	(−4.64)
dividend	−0.682***	(−6.25)	−0.642***	(−5.77)	−0.675***	(−6.22)	−0.674***	(−6.22)
age	−0.016***	(−3.73)	−0.017***	(−3.77)	−0.016***	(−3.81)	−0.016***	(−3.77)
opcycle	0.154*	(1.93)	0.148*	(1.81)	0.146*	(1.83)	0.144*	(1.82)
loss	−1.120***	(−9.32)	−1.102***	(−8.91)	−1.122***	(−9.30)	−1.123***	(−9.30)
Constant	1.344*	(1.73)	1.356*	(1.70)	1.393*	(1.81)	1.366*	(1.76)
Industry dummy	Y		Y		Y		Y
Year dummy	Y		Y		Y		Y
Observations	38,987		36,555		39,159		39,159
R-squared	0.460		0.464		0.460		0.460

	[1]		[2]		[3]		[4]
	coef	t	coef	t	coef	t	coef	t
hedge	0.536*	(1.76)	0.609	(1.53)	0.521*	(1.67)	0.517*	(1.73)
EQ1	0.208	(0.24)
EQ1_hedge	9.070*	(1.92)
EQ2			−1.001	(−0.63)
EQ2_hedge			6.435	(1.00)
EQ3					1.498**	(2.28)
EQ3_hedge					6.073*	(1.93)
EQ4							1.022	(1.55)
EQ4_hedge							8.151**	(2.21)
institutions	0.860***	(4.14)	0.910***	(4.09)	0.884***	(4.21)	0.877***	(4.23)
analysts	0.040***	(4.86)	0.040***	(4.71)	0.040***	(4.86)	0.040***	(4.85)
gindex	0.004	(0.16)	−0.001	(−0.04)	0.005	(0.20)	0.004	(0.17)
gdummy	0.263	(1.04)	0.306	(1.19)	0.242	(0.96)	0.249	(0.99)
logasset	−0.316***	(−6.40)	−0.318***	(−6.19)	−0.313***	(−6.37)	−0.314***	(−6.34)
MB	0.815***	(13.83)	0.810***	(13.22)	0.809***	(13.77)	0.809***	(13.75)
stdcfo	3.843***	(4.68)	4.785***	(4.67)	3.653***	(4.37)	3.664***	(4.38)
stdsales	−0.344	(−1.13)	−0.247	(−0.70)	−0.408	(−1.35)	−0.397	(−1.34)
stdInvest	0.006**	(1.99)	0.005	(1.63)	0.006**	(2.04)	0.006**	(2.02)
zscore	0.344***	(5.67)	0.342***	(5.34)	0.341***	(5.62)	0.338***	(5.57)
tangibility	15.237***	(21.37)	15.119***	(20.89)	15.171***	(21.29)	15.280***	(21.18)
indK	−4.364***	(−6.28)	−4.121***	(−6.00)	−4.340***	(−6.25)	−4.351***	(−6.26)
cfosale	0.202***	(2.74)	0.217***	(2.85)	0.199***	(2.69)	0.202***	(2.74)
slack	−0.001***	(−4.61)	−0.001***	(−4.77)	−0.001***	(−4.53)	−0.001***	(−4.64)
dividend	−0.682***	(−6.25)	−0.642***	(−5.77)	−0.675***	(−6.22)	−0.674***	(−6.22)
age	−0.016***	(−3.73)	−0.017***	(−3.77)	−0.016***	(−3.81)	−0.016***	(−3.77)
opcycle	0.154*	(1.93)	0.148*	(1.81)	0.146*	(1.83)	0.144*	(1.82)
loss	−1.120***	(−9.32)	−1.102***	(−8.91)	−1.122***	(−9.30)	−1.123***	(−9.30)
Constant	1.344*	(1.73)	1.356*	(1.70)	1.393*	(1.81)	1.366*	(1.76)
Industry dummy	Y		Y		Y		Y
Year dummy	Y		Y		Y		Y
Observations	38,987		36,555		39,159		39,159
R-squared	0.460		0.464		0.460		0.460

Note(s): This table reports the results on how hedging intensity affects the negative impact of (low) financial reporting quality on investment. The dependent variable is capital spending, computed as the capital expenditures scaled by lagged total assets. EQs are financial reporting quality measures, with higher values in EQs indicating lower financial reporting quality. hedge is the proxy for hedging intensity

Source(s): The authors

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