Corporate Governance And Managerial Risk Taking

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Corporate Governance And Managerial Risk Taking

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Author : Kose John
language : en
Publisher:
Release Date : 2009

Corporate Governance And Managerial Risk Taking written by Kose John and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.

We study how the investor protection environment affects corporate managers' incentives to take value-enhancing risks. In our model, the manager chooses higher perk consumption when investor protection is low. Since perks represent a priority claim held by the manager, lower investor protection leads the manager to implement a sub-optimally conservative investment policy, effectively aligning her risk-taking incentives with those of the debt holders. By the same token, higher investor protection is associated with riskier investment policy and faster firm growth. We test these predictions in a large Global Vantage panel. We find strong empirical confirmation that corporate risk-taking and firm growth rates are positively related to the quality of investor protection.

Corporate Governance And Managerial Risk Taking

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Author : Kose John
language : en
Publisher:
Release Date : 2005

Corporate Governance And Managerial Risk Taking written by Kose John and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with categories.

We study how the investor protection environment affects corporate managers' incentives to take value-enhancing risks. In our model, the manager chooses higher perk consumption when investor protection is low. Since perks represent a priority claim held by the manager, lower investor protection leads the manager to implement a sub-optimally conservative investment policy, effectively aligning her risk-taking incentives with those of the debt holders. By the same token, higher investor protection is associated with riskier investment policy and faster firm growth. We test these predictions in a large Global Vantage panel. We find strong empirical confirmation that corporate risk-taking and firm growth rates are positively related to the quality of investor protection.

Risk Management And Corporate Governance

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Author : Abol Jalilvand
language : en
Publisher: Routledge
Release Date : 2013-05-13

Risk Management And Corporate Governance written by Abol Jalilvand and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-05-13 with Business & Economics categories.

The asymmetry of responsibilities between management and corporate governance both for day-to-day operations and the board’s monthly or quarterly review and evaluation remains an unresolved challenge. Expertise in the area of risk management is a fundamental requirement for effective corporate governance, if not by all, certainly by some board members. This means that along with board committees such as "compensation", "audit", "strategy" and several others, "risk management" committees must be established to monitor the likelihood of certain events that may cause the collapse of the firm. Risk Management and Corporate Governance allows academics and practitioners to assess the state of international research in risk management and corporate governance. The chapters overlay the areas of risk management and corporate governance on both financial and operating decisions of a firm while treating legal and political environments as externalities to decisions undertaken.

Corporate Social Responsibility Corporate Governance And Managerial Risk Taking

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Author : Minyoung Pyo
language : en
Publisher:
Release Date : 2014

Corporate Social Responsibility Corporate Governance And Managerial Risk Taking written by Minyoung Pyo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.

Essays On Corporate Risk Governance

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Author : Mr. Gaizka Ormazabal Sanchez
language : en
Publisher: Stanford University
Release Date : 2011

Essays On Corporate Risk Governance written by Mr. Gaizka Ormazabal Sanchez and has been published by Stanford University this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.

This dissertation comprises three papers on the governance of corporate risk: 1. The first paper investigates the role of organizational structures aimed at monitoring corporate risk. Proponents of risk-related governance structures, such as risk committees or Enterprise Risk Management (ERM) programs, assert that risk monitoring adds value by ensuring that corporate risks are managed. An alternative view is that such governance structures are nothing more than window-dressing created in response to regulatory or public pressure. Consistent with the former view, I find that, in the period between 2000 and 2006, firms with more observable risk oversight structures exhibit lower equity and credit risk than firms with fewer or no observable risk oversight structures. I also provide evidence that firms with more observable risk oversight structures experienced higher returns during the worst days of the 2007-2008 financial crisis and were less susceptible to market fluctuations than firms with fewer or no observable risk oversight structures. Finally, I find that firms without observable risk oversight structures experienced higher abnormal returns to recent legislative events relating to risk management than firms with observable risk oversight structures. 2. The most common empirical measure of managerial risk-taking incentives is equity portfolio vega (Vega), which is measured as the dollar change in a manager's equity portfolio for a 0.01 change in the standard deviation of stock returns. However, Vega exhibits at least three undesirable features. First, Vega is expressed as a dollar change. This implicitly assumes that managers with identical Vega have the same incentives regardless of differences in their total equity and other wealth. Second, the small change in the standard deviation of returns used to calculate Vega (i.e., 0.01) yields a very local approximation of managerial risk-taking incentives. If an executive's expected payoff is highly nonlinear over the range of potential stock price and volatility outcomes, a local measure of incentives is unlikely to provide a valid assessment of managerial incentives. Third, Vega is measured as the partial derivative of the manager's equity portfolio with respect to return volatility. This computation does not consider that this partial derivative also varies with changes in stock price. The second paper develops and tests a new measure of managerial risk-taking equity incentives that adjusts for differences in managerial wealth, considers more global changes in price and volatility, and explicitly considers the impact of stock price and volatility changes. We find that our new measure exhibits higher explanatory power and is more robust to model specification than Vegafor explaining a wide range of measures of risk-taking behavior. 3. The third paper examines the relation between shareholder monitoring and managerial risk-taking incentives. We develop a stylized model to show that shareholder monitoring mitigates the effect of contractual risk-taking incentives on the manager's actions. Consistent with the model, we find empirically that the positive association between the CEO's contractual risk-taking incentives and risk-taking behavior decreases with the level of shareholder monitoring. Furthermore, consistent with the board anticipating and optimally responding to shareholder monitoring, boards of firms exposed to more intense monitoring design compensation contracts that provide higher incentives to take risks. Overall, our results suggest that, when evaluating risk-taking incentives provided by a compensation contract, it is important to account for the firm's monitoring environment.

Corporate Governance And Risk Management

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Author :
language : en
Publisher: Bookboon
Release Date :

Corporate Governance And Risk Management written by and has been published by Bookboon this book supported file pdf, txt, epub, kindle and other format this book has been release on with categories.

Corporate Governance And Risk Management In Financial Institutions

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Author : Robert C. Gericke
language : en
Publisher: Springer
Release Date : 2018-03-27

Corporate Governance And Risk Management In Financial Institutions written by Robert C. Gericke and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-03-27 with Business & Economics categories.

This book presents an overview of corporate governance and risk management, analyzing their interdependence and particularly their relevance in banking. It discusses current trends in corporate governance, such as stakeholder management, financial performance and the cost of equity, compensation schemes, board structures and shareholder activism. Further, it reviews some of the most important regulatory changes introduced since the latest financial crisis and highlights their impact on the annual reports of the banks under analysis. Lastly, the book assesses and compares major banks in Brazil and Germany with special emphasis on the aspects mentioned above, revealing surprising similarities between the banking systems of these otherwise disparate countries.

Managing Risk And Opportunity

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Author : Torben Juul Andersen
language : en
Publisher: OUP Oxford
Release Date : 2014-04-24

Managing Risk And Opportunity written by Torben Juul Andersen and has been published by OUP Oxford this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-04-24 with Business & Economics categories.

This book promotes good risk governance and risk management practices to corporate managers, executives, and directors wherever they operate around the world. The major corporate scandals have their roots in governance failure pointing to the link between risk governance and good performance outcomes. This topic is timely and of interest both to the academic community as well as to practicing managers, executives, and directors. The volume focuses on contemporary risk leadership issues based on recent research insights but avoids excessive technical language and mathematical formulas. The book is framed around the challenges imposed on executives and directors in dealing with an increasingly complex and unpredictable world. This requires a new risk leadership focus that not only avoids the downside risks but also considers ways to exploit the upside potential offered by a dynamic environment. The underlying logic is built on the principles of financial economics where benefits derive from reducing bankruptcy costs and increasing future cash inflows. This provides a stringent framework for analyzing the effect of different risk management actions and behaviors in effective risk-taking organizations. Hence, the book addresses the potential for upside gains as much as the threats of downside losses that represent the conventional risk perspectives. It states the simple fact that you must be willing to take risk to increase strategic responsiveness and corporate manoeuverability. The text builds the arguments in logical steps explicating relevant techniques and practices along the way that invite to immediate applications and practical thinking

Corporate Governance Risk Management And Corporate Governance

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Author : OECD
language : en
Publisher: OECD Publishing
Release Date : 2014-04-01

Corporate Governance Risk Management And Corporate Governance written by OECD and has been published by OECD Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-04-01 with categories.

This sixth peer review of the OECD Principles of Corporate Governance analyses the corporate governance framework and practices relating to corporate risk management, in the private sector and in state-owned enterprises.

Corporate Governance And Risk Taking In New Zealand

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Author : Hardjo Koerniadi
language : en
Publisher:
Release Date : 2014

Corporate Governance And Risk Taking In New Zealand written by Hardjo Koerniadi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.

We analyse the impact of firm-level corporate governance practices on the riskiness of a firm's stock returns in a setting that can be considered as less conducive to managerial risk-taking. Our empirical evidence, based on a comprehensive sample of New Zealand firms, shows that firms with large boards are associated with lower levels of risk-taking, ceteris paribus. Furthermore, our results indicate that multiple large shareholders facilitate higher levels of risk-taking by the firm. Finally, our results also show that concentrated shareholdings of inside directors have a negative relation to risk-taking. Our findings are robust to controls for the three potential sources of endogeneity. Since prior work documents results consistent with the view that institutional and market environments largely determine governance outcomes, our work has implications for managers, investors and policy makers, particularly in less developed capital markets with weaker corporate takeover regimes and less performance-oriented managerial compensation.