Abstract

While in risk management literature, there are many studies indicating that industry structure and financial distress have effects on corporate hedging behavior individually, their joint impact, however, has never been examined. This thesis presents the first-ever empirical research investigating the joint influence of industry structure and financial distress costs upon corporate risk management by examining 396 companies in the U.S. manufacturing industries with 2-digit SIC codes from 20 to 39 over the period from 2010 to 2015. According to their financial status and the measurement of industry structure, the 396 companies are divided into 4 groups: financially unconstrained-competitive industry, financially constrained-competitive industry, financially unconstrained-concentrated industry, and financially constrained-concentrated industry. The results suggest that industry structure and financial distress have a significant combined effect only on the financially constrained companies in competitive manufacturing industries.