TY - JOUR T1 - Earnings Impact of Derivatives Under Hedge Accounting JF - Special Issues SP - 62 LP - 64 VL - 2001 IS - 1 AU - Andrew J Kalotay AU - Leslie A. Abreo Y1 - 2001/09/21 UR - https://pm-research.com/content/2001/1/62.abstract N2 - Ideally, a hedge should be deemed highly effective only if it actually achieves the intended reduction of business risk. A corporation may be tempted to use a lenient correlation test so that a derivative will qualify easily for hedge accounting treatment. However, this may result in winning the battle but losing the war because the hedge may fail to achieve the desired reduction in earnings volatility. This article demonstrates how to project the earnings impact of a highly effective hedge using accepted statistical risk management methods. ER -