Are firms successful at selective hedging?

We analyze the corporate risk management policies of 44 companies in the gold mining industry. Firms tend to decrease hedging as prices move against them - behavior contrary to that predicted by risk management theory. These results, along with new survey evidence, suggest that firms attempt to time market prices, so-called selective hedging. Although estimates show a statistically significant ability of producers to favorably adjust hedge ratios, this can be attributed to sample-specific negative autocorrelation in gold prices. Economic gains to selective hedging are small, and no evidence suggests that selective hedging leads to superior operating or financial performance.