Hedging can be advantageous to shareholders because management is in a better position than shareholders to recognize disequilibrium conditions and to take advantage of single opportunities to enhance firm value through selective hedging.

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Hedging can help protect shareholders from losses, but it can also limit potential gains. However, management has access to more information and expertise than individual shareholders, making them better equipped to identify and seize profitable hedging opportunities that can increase firm value.

Hedging Can Be Advantageous to Shareholders Because Management Is in a Better