Article:
Henry T.C. Hu, Hedging Expectations: “Derivative Reality” and the Law and Finance of the Corporative Objective, 73 TEXAS L. REV. 985 (1995).
 

Abstract:
The question of when a corporation should enter into derivatives for hedging purposes depends on a consideration of the nature of the corporation. The choice of conception, be it “traditional,” “pure shareholder wealth maximization,” or “blissful shareholder wealth maximization,” determines the types and amounts of corporate hedging behavior that are appropriate. Pending a new corporate paradigm, consideration of corporation-specific shareholder expectations and associated disclosures must supplement existing conceptions of the corporation as polestars for corporate hedging behaviors.