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Do Managers Exhibit Loss Aversion in Their Risk Management Practices? Evidence from the Gold Mining Industry

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Advances in Financial Risk Management

Abstract

For years, hedging made Southwest Airlines Co. the most consistently profitable airline in the US. But included in its third-quarter earnings, released Thursday, was a $247 million accounting charge, which reflected the decline in the value of its hedges as the price of oil dropped during the quarter. The charge caused Southwest, which had a healthy operating profit, to post a quarterly net loss for the first time in 17 years. ‘Southwest is looking for opportunities to “de-hedge” some of its fuel,’ Gary Kelly, the airline’s chief executive, said Thursday. ‘Low fuel prices are a good thing … and an opportunity that we’ll want to take the best advantage of that we can.’ Wall Street Journal, ‘Fuel Hedges Cloud Airline Results,’ 17 October 2008.

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Authors
  1. Tim R. Adam
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  2. Chitru S. Fernando
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  3. Evgenia Golubeva
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Editor information

Editors and Affiliations

  1. Monash University, Melbourne, Australia

    Jonathan A. Batten

  2. Hong Kong University of Science and Technology, Hong Kong

    Peter MacKay

  3. Department of Business and Economics, University of Passau, Germany

    Niklas Wagner

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© 2013 Tim R. Adam, Chitru S. Fernando, and Evgenia Golubeva

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Adam, T.R., Fernando, C.S., Golubeva, E. (2013). Do Managers Exhibit Loss Aversion in Their Risk Management Practices? Evidence from the Gold Mining Industry. In: Batten, J.A., MacKay, P., Wagner, N. (eds) Advances in Financial Risk Management. Palgrave Macmillan, London. https://doi.org/10.1057/9781137025098_5

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