I would really appreciate if someone could thoroughly explain to me this:
'Hedging that reduces volatility in the true economic value of the firm could increase the firm’s earnings variability as transmitted to the equity markets through the firm’s accounting disclosures, due to the gap...
One of the advantages for a firm to hedge its risk exposures is 'the possibility of lowering its cost of capital (debt or equity), which could lead to increased economic growth.'
Q. How lowering its cost of capital may benefit a firm?