Hedging Policies to Reduce Agency Costs in Brazil

Round 1

Reviewer 1 Report

The paper is well done. 

Author Response

Dear reviewer,

We would like to thank you. 

The authors

Reviewer 2 Report

I have carefully considered and read the manuscript entitled “Hedging Policies to Reduce Agency Costs in Brazil” and have the following observations:

Top of Form

Given the recent Brazilian economic scenario, characterized by political uncertainties and economic instabilities, it is essential for companies to engage in hedging as part of their financial policy in order to prevent their results from being affected by market frictions. In this context, the present study aimed to verify the impact of hedging on the agency costs of Brazilian companies. The methodology used was that of panel data contemplating a manually collected database of 154 companies between 2010 and 2017 (all companies that use derivatives for hedging). The results obtained agree with the literature on hedging and agency costs, indicating that the greater the use of hedging, the lower the agency costs faced by shareholders, expanding on the discussions involving developed markets. This relationship shows that by using hedging in a company's financial policy, managers can minimize the impacts of market frictions and reduce the residual losses of shareholders in relation to what would otherwise occur.Bottom of Form

 

Top of Form

Comments and Suggestions for Authors:

This paper is needing enough clarity about the main theme of your manuscript. There are some spelling errors, and more clarifications and improvements are needed for reconsidering it for the publication in the JRFM.

In addition to the above, I have a few points for the authors to consider before the publication of this work:

• The abstract has some issues. So, it is recommended that rewrite the abstract with clear and concise sentences without ambiguous illustrations.
• Please highlight your contribution and novelty of this manuscript with accuracy in the introduction part.
• Please update your literature with a few latest studies if applicable:

·       At the end of the theoretical background, you have to present in a summative and concluding way

 

• Recheck the references and their style are according to the journal requirements, and in-text and end-text should be the same and vice versa.
• In the discussion section, some supplementary literature must be added to compare and contrast the key findings with the existing study.
• The conclusion should be based on your results and discussion. So, do consider it accordingly and improve this section.
• The acronyms should be defined at first appearance in the manuscript and then must be consistently used throughout the manuscript. Furthermore, the manuscript must be checked for typo errors and spelling checks.

Author Response

Dear reviewer,

We would like to thank you. Regarding the comments, all of them were answered, in view of the improvement of the work.

The authors

Author Response File: Author Response.pdf

Reviewer 3 Report

 

 

It is worth agreeing with the author's' thesis on the relevance of the research topic.  The relationship analyzed here has not been widely explored in the hedging literature, and never in the Brazilian market, an emerging market that according, thus requiring greater attention by managers in determining the risk mitigation policies.

The study also confirms that contracting of hedge instruments serves to demonstrate to stakeholders better performance of a firm’s operations, leading creditors and investors to make better decisions about their contracts with the company, since the profits are subject to less information asymmetry.

 This article can be recommended for publication, it is an interesting and relevant study conducted on the example of the Brazilian market. Taking into account its specifics and changes in exchange rates that can completely level the financial results of effective activities.

Author Response

Dear reviewer,

We would like to thank you. 

The authors

Round 2

Reviewer 2 Report

This paper is very clear and interesting. The authors have done properly all the necessary corrections. However, I want to ask the to authors please use the JRFM format for text and references before publication. Else, the manuscript has considerably improved and so far, it is endorsed for final publication in JRFM.

Comments for author File: Comments.docx

Author Response

Dear reviewer,

We would like to thank you on your suggestions and comments. 

The authors