This paper estimates a reduced-form model to assess the credit risk of General Insurance (GI) non-life firms in the UK. Compared to earlier studies, it uses a much larger sample including 30 years of data for 515 firms, and also considers a much wider set of possible determinants of credit risk. The empirical results suggest that macroeconomic and firm-specific factors both play important roles. Other key findings are the following: credit risk varies across firms depending on their business lines; there is default clustering in the GI industry; different reinsurance levels also affect the credit risk of insurance firms. The implications of these findings for regulators of GI firms under the coming Solvency II are discussed.
{"title":"Analysing the Determinants of Credit Risk for General Insurance Firms in the UK","authors":"G. Caporale, M. Cerrato, Xuan Zhang","doi":"10.2139/ssrn.2808513","DOIUrl":"https://doi.org/10.2139/ssrn.2808513","url":null,"abstract":"This paper estimates a reduced-form model to assess the credit risk of General Insurance (GI) non-life firms in the UK. Compared to earlier studies, it uses a much larger sample including 30 years of data for 515 firms, and also considers a much wider set of possible determinants of credit risk. The empirical results suggest that macroeconomic and firm-specific factors both play important roles. Other key findings are the following: credit risk varies across firms depending on their business lines; there is default clustering in the GI industry; different reinsurance levels also affect the credit risk of insurance firms. The implications of these findings for regulators of GI firms under the coming Solvency II are discussed.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115967690","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we analyze the effects of disclosing corporate tax reports on the performance of financial markets and the use of asset prices by the tax enforcement agency in order to infer the true corporate cash flows. We model the interaction between a firm and the tax auditing agency, and highlight the role played by the tax report as a public signal used by the market dealer and the role of prices as a signal used by the tax authority. We discuss the determinants of both the reporting strategy of the firm and the auditing policy of the tax authority. Our model suggests that, despite disclosure of the tax reports being beneficial for market performance (as the spreads and trading costs are smaller than under no disclosure), the tax agency might have incentives to not disclose the tax report when its objective is to maximize expected net tax collection.
{"title":"Disclosure of Corporate Tax Reports, Tax Enforcement, and Price Information","authors":"J. Caballe, A. Dumitrescu","doi":"10.2139/ssrn.2576741","DOIUrl":"https://doi.org/10.2139/ssrn.2576741","url":null,"abstract":"In this paper, we analyze the effects of disclosing corporate tax reports on the performance of financial markets and the use of asset prices by the tax enforcement agency in order to infer the true corporate cash flows. We model the interaction between a firm and the tax auditing agency, and highlight the role played by the tax report as a public signal used by the market dealer and the role of prices as a signal used by the tax authority. We discuss the determinants of both the reporting strategy of the firm and the auditing policy of the tax authority. Our model suggests that, despite disclosure of the tax reports being beneficial for market performance (as the spreads and trading costs are smaller than under no disclosure), the tax agency might have incentives to not disclose the tax report when its objective is to maximize expected net tax collection.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125411791","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bulgarian Abstract: Понятието „бизнес“ днес се използва широко както в икономическата литература, така и в масовото общуване като смисъла, който се влага в него не винаги е еднозначен.В контекста на счетоводните стандарти във връзка с представянето на сделките по сливане и придобиване категорията „бизнес“ е дефинирана в приложимия стандарт за бизнескомбинациите – МСФО 3. Считаме, че внасянето на яснота в полето на счетоводното регламентиране на една изключително важна категория като бизнескомбинациите е повече от наложително, тъй като вярваме, че разбирането на икономическия смисъл на бизнескомбинациите, чиято есенция е в разбирането на категорията бизнес, е от решаващо значение за тяхното счетоводно регламентиране и последващо представяне във финансовите отчети. Освен това бизнескомбинациите са носител на огромни транзакционни потоци, което прави информацията за тези сделки и тяхното счетоводно представяне изключително важни за бъдещите инвестиционни решения С оглед на изложените в текста аргументи е предложено дефиницията за бизнес да претърпи редакция и да придобие следния вид: „бизнес“ представлява съвкупност от активи и дейности (и поети задължения), които предприятието ръководи и осъществява с цел получаване на възвръщаемост за инвеститорите под различна форма и които в обозримо бъдеще не се предвижда да бъдат прекратени.Последната част от предложената дефиниция считаме, че е особено важна, тъй като има отношение към цялостната концепция за счетоводно отчитане на една бизнескомбинация.English Abstract: One of the most important moments, gives the appearance of the whole topic of business combinations is the determination whether as a result of the business combination, the acquirer obtains control of one or more businesses. We believe that the acquisition of the business and its continuation is the basis for a business such as economic transactions. If the acquirer acquires resources and processes that are not considered business at the date of acquisition, then to that date should not be recognized and the goodwill from the transaction as a separate identifiable asset and any difference that emerges to present itself as gain or loss on the transaction. Adopting this basic thesis believe that the same should be considered and a situation in which the acquirer can identify the date of acquisition business, but does not provide for its continuation.
{"title":"КАТЕГОРИЯТА „БИЗНЕС“ В КОНТЕКСТА НА СЧЕТОВОДНОТО ОТЧИТАНЕ НА БИЗНЕСКОМБИНАЦИИТЕ СПОРЕД МСС/МСФО (The Category 'Business' in the Context of Accounting for Business Combinations Under IAS/IFRS)","authors":"A. Atanasov","doi":"10.2139/ssrn.2784114","DOIUrl":"https://doi.org/10.2139/ssrn.2784114","url":null,"abstract":"Bulgarian Abstract: Понятието „бизнес“ днес се използва широко както в икономическата литература, така и в масовото общуване като смисъла, който се влага в него не винаги е еднозначен.В контекста на счетоводните стандарти във връзка с представянето на сделките по сливане и придобиване категорията „бизнес“ е дефинирана в приложимия стандарт за бизнескомбинациите – МСФО 3. Считаме, че внасянето на яснота в полето на счетоводното регламентиране на една изключително важна категория като бизнескомбинациите е повече от наложително, тъй като вярваме, че разбирането на икономическия смисъл на бизнескомбинациите, чиято есенция е в разбирането на категорията бизнес, е от решаващо значение за тяхното счетоводно регламентиране и последващо представяне във финансовите отчети. Освен това бизнескомбинациите са носител на огромни транзакционни потоци, което прави информацията за тези сделки и тяхното счетоводно представяне изключително важни за бъдещите инвестиционни решения С оглед на изложените в текста аргументи е предложено дефиницията за бизнес да претърпи редакция и да придобие следния вид: „бизнес“ представлява съвкупност от активи и дейности (и поети задължения), които предприятието ръководи и осъществява с цел получаване на възвръщаемост за инвеститорите под различна форма и които в обозримо бъдеще не се предвижда да бъдат прекратени.Последната част от предложената дефиниция считаме, че е особено важна, тъй като има отношение към цялостната концепция за счетоводно отчитане на една бизнескомбинация.English Abstract: One of the most important moments, gives the appearance of the whole topic of business combinations is the determination whether as a result of the business combination, the acquirer obtains control of one or more businesses. We believe that the acquisition of the business and its continuation is the basis for a business such as economic transactions. If the acquirer acquires resources and processes that are not considered business at the date of acquisition, then to that date should not be recognized and the goodwill from the transaction as a separate identifiable asset and any difference that emerges to present itself as gain or loss on the transaction. Adopting this basic thesis believe that the same should be considered and a situation in which the acquirer can identify the date of acquisition business, but does not provide for its continuation.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129161811","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Steven Crawford, Ying Huang, Ningzhong Li, Ziyun Yang
This study examines the effect of customer-base concentration on corporate public disclosure policy. We argue that large customers have lower costs of accessing the supplier firm’s private information, which reduces their demand for the supplier’s public information, suggesting a negative association between customer concentration and the amount of public disclosure. Consistent with this argument, we find that the likelihood and frequency of management earnings forecasts decrease with customer concentration among firms with major corporate customers. This effect is stronger when the supplier and customers are engaged in more relationship-specific investments and when it is less costly for customers to find another supplier. We find a similar negative association between the concentration of prospective customers and the likelihood and frequency of management earnings forecasts.
{"title":"Customer Concentration and Public Disclosure: Evidence from Management Earnings and Sales Forecasts","authors":"Steven Crawford, Ying Huang, Ningzhong Li, Ziyun Yang","doi":"10.2139/ssrn.2781627","DOIUrl":"https://doi.org/10.2139/ssrn.2781627","url":null,"abstract":"This study examines the effect of customer-base concentration on corporate public disclosure policy. We argue that large customers have lower costs of accessing the supplier firm’s private information, which reduces their demand for the supplier’s public information, suggesting a negative association between customer concentration and the amount of public disclosure. Consistent with this argument, we find that the likelihood and frequency of management earnings forecasts decrease with customer concentration among firms with major corporate customers. This effect is stronger when the supplier and customers are engaged in more relationship-specific investments and when it is less costly for customers to find another supplier. We find a similar negative association between the concentration of prospective customers and the likelihood and frequency of management earnings forecasts.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"84 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-05-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114367810","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I study an entrepreneur who finances a project with uncertain cash flows and who jointly chooses the disclosure and financing policies. In the Bayesian persuasion framework, I show that it is optimal to truthfully reveal whether the project’s cash flows are above a threshold. This class of threshold policies is optimal for any prior belief, monotone security, and increasing utility function of the entrepreneur. I characterize how the disclosure threshold depends on the underlying security, the prior, and the cost of investment. The financing choice of the entrepreneur is determined by a new trade-off between the likelihood of persuading investors and relinquishing cash flow rights. Absent further frictions, the optimal security is indeterminate. If there is adverse selection after the entrepreneur has disclosed information, the unique outcome is a pooling equilibrium in which the entrepreneur pledges the entire cash flow. This paper was accepted by Tomasz Piskorski, finance.
{"title":"Optimal Financing and Disclosure","authors":"M. Szydlowski","doi":"10.2139/ssrn.2735981","DOIUrl":"https://doi.org/10.2139/ssrn.2735981","url":null,"abstract":"I study an entrepreneur who finances a project with uncertain cash flows and who jointly chooses the disclosure and financing policies. In the Bayesian persuasion framework, I show that it is optimal to truthfully reveal whether the project’s cash flows are above a threshold. This class of threshold policies is optimal for any prior belief, monotone security, and increasing utility function of the entrepreneur. I characterize how the disclosure threshold depends on the underlying security, the prior, and the cost of investment. The financing choice of the entrepreneur is determined by a new trade-off between the likelihood of persuading investors and relinquishing cash flow rights. Absent further frictions, the optimal security is indeterminate. If there is adverse selection after the entrepreneur has disclosed information, the unique outcome is a pooling equilibrium in which the entrepreneur pledges the entire cash flow. This paper was accepted by Tomasz Piskorski, finance.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130440792","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-03-23DOI: 10.18028/2238-5320/rgfc.v5n2p23-37
L. Forte, João Batista Santos Neto, F. Nobre, Liana Holanda Nepomuceno Nobre, D. Queiroz
Disclosure theory assumes the wide availability of information to users, increasing the level of corporate transparency and reducing information asymmetry common to the business environment. This research aims to investigate the factors influencing the level of voluntary disclosure by companies in the Brazilian banking sector. Corporate reputation (REP), firm size (TAM), performance (DES), and internationalization (ADR) were the variables used as factors influencing the level of disclosure. The sample was composed of the 100 largest Brazilian banks in relation to total assets in 2012. The methodology technique used multiple linear regression. The evidence revealed that the corporate reputation and the size of the companies had a significant and positive relationship with the level of voluntary disclosure. In this sense, the larger the company and higher the standard of corporate reputation, the higher the level of corporate disclosure. Performance and internationalization were not statistically significant.
{"title":"Determinants of Voluntary Disclosure: A Study in the Brazilian Banking Sector","authors":"L. Forte, João Batista Santos Neto, F. Nobre, Liana Holanda Nepomuceno Nobre, D. Queiroz","doi":"10.18028/2238-5320/rgfc.v5n2p23-37","DOIUrl":"https://doi.org/10.18028/2238-5320/rgfc.v5n2p23-37","url":null,"abstract":"Disclosure theory assumes the wide availability of information to users, increasing the level of corporate transparency and reducing information asymmetry common to the business environment. This research aims to investigate the factors influencing the level of voluntary disclosure by companies in the Brazilian banking sector. Corporate reputation (REP), firm size (TAM), performance (DES), and internationalization (ADR) were the variables used as factors influencing the level of disclosure. The sample was composed of the 100 largest Brazilian banks in relation to total assets in 2012. The methodology technique used multiple linear regression. The evidence revealed that the corporate reputation and the size of the companies had a significant and positive relationship with the level of voluntary disclosure. In this sense, the larger the company and higher the standard of corporate reputation, the higher the level of corporate disclosure. Performance and internationalization were not statistically significant.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-03-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129969656","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Purpose - This study aims to empirically explore corporate governance and the demographic traits of top management teams as the determinants of voluntary risk disclosure practices in listed banks. This study also aims to contribute to the existing risk disclosure literature by investigating the effect of a combination of determinants on voluntary risk disclosure practices in an emerging market. Furthermore, this study seeks to contribute to risk disclosure theories by employing the upper echelons theory to examine the determinants and their effects on voluntary risk disclosure practices. Design/Methodology/Approach - This investigation uses manual content analysis to measure the levels of risk disclosure in all Saudi listed banks from 2009 to 2013. It also uses ordinary least squares regressions analysis to examine the joint effect of corporate governance and demographic traits on risk disclosure. Results - The empirical findings show that external ownership, audit committee meetings, gender, size, profitability and board size are primary determinants of voluntary risk disclosure practices in Saudi listed banks. The remainder of the independent variables of both corporate governance mechanisms and demographic traits are insignificantly correlated with voluntary risk disclosure practices in Saudi listed banks. This study supports upper echelons theory and further encompasses demographic research into the risk disclosure field. Potential Implications - The empirical findings offer several important implications by reporting to banks’ stockholder, regulatory bodies and any other interested group on the importance of corporate governance and demographic determinants, which can be used to augment risk reporting in the banking industry. This study also backs upper echelons theory and encourages further demographic research into the risk disclosure field. Originality - To the best of the researcher’s knowledge, no prior research has been conducted on the determinants of risk disclosure in Saudi Arabian listed banks. Therefore, this is the first study to investigate the determinants of risk disclosure in the context of Saudi Arabia.
{"title":"Corporate Governance and Risk Disclosure: Evidence from Saudi Arabia","authors":"Abdullah Al-Maghzom, K. Hussainey, Doaa A Aly","doi":"10.22495/cocv13i2p14","DOIUrl":"https://doi.org/10.22495/cocv13i2p14","url":null,"abstract":"Purpose - This study aims to empirically explore corporate governance and the demographic traits of top management teams as the determinants of voluntary risk disclosure practices in listed banks. This study also aims to contribute to the existing risk disclosure literature by investigating the effect of a combination of determinants on voluntary risk disclosure practices in an emerging market. Furthermore, this study seeks to contribute to risk disclosure theories by employing the upper echelons theory to examine the determinants and their effects on voluntary risk disclosure practices. Design/Methodology/Approach - This investigation uses manual content analysis to measure the levels of risk disclosure in all Saudi listed banks from 2009 to 2013. It also uses ordinary least squares regressions analysis to examine the joint effect of corporate governance and demographic traits on risk disclosure. Results - The empirical findings show that external ownership, audit committee meetings, gender, size, profitability and board size are primary determinants of voluntary risk disclosure practices in Saudi listed banks. The remainder of the independent variables of both corporate governance mechanisms and demographic traits are insignificantly correlated with voluntary risk disclosure practices in Saudi listed banks. This study supports upper echelons theory and further encompasses demographic research into the risk disclosure field. Potential Implications - The empirical findings offer several important implications by reporting to banks’ stockholder, regulatory bodies and any other interested group on the importance of corporate governance and demographic determinants, which can be used to augment risk reporting in the banking industry. This study also backs upper echelons theory and encourages further demographic research into the risk disclosure field. Originality - To the best of the researcher’s knowledge, no prior research has been conducted on the determinants of risk disclosure in Saudi Arabian listed banks. Therefore, this is the first study to investigate the determinants of risk disclosure in the context of Saudi Arabia.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122586372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Lehman Brothers’ bankruptcy was the largest in the history of the United States. It contributed in part to the 2007-2008 Global Financial Crisis. Lehman Brothers, as enumerated in this paper, was principally responsible for its own collapse with the hugely risky investments it undertook which led to the accumulation of toxic assets. With its huge size and ability to manipulate financial reports, it engaged in the use of Repo transactions to hide its rather high leverage from the prying eyes of regulators, investors and lenders. This paper analyzes the events leading up to the colossal failure of the bank and suggests that tight regulations and accounting standards with no gray areas are the measures needed to contain the pursuit of high risk business models by greedy CEO’s.
{"title":"Pursuing a High Risk Business Model: The Case of Lehman Brothers","authors":"Karikari Amoa-Gyarteng","doi":"10.2139/ssrn.2717666","DOIUrl":"https://doi.org/10.2139/ssrn.2717666","url":null,"abstract":"Lehman Brothers’ bankruptcy was the largest in the history of the United States. It contributed in part to the 2007-2008 Global Financial Crisis. Lehman Brothers, as enumerated in this paper, was principally responsible for its own collapse with the hugely risky investments it undertook which led to the accumulation of toxic assets. With its huge size and ability to manipulate financial reports, it engaged in the use of Repo transactions to hide its rather high leverage from the prying eyes of regulators, investors and lenders. This paper analyzes the events leading up to the colossal failure of the bank and suggests that tight regulations and accounting standards with no gray areas are the measures needed to contain the pursuit of high risk business models by greedy CEO’s.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121589226","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Risk generated by uncertainty about future management policies appears to affect firms' cost of borrowing. In a sample of S&P 1500 firms between 1987 and 2012, CDS spreads, loan spreads and bond yield spreads all decline over the first three years of CEO tenure, holding other macroeconomic, firm, and security level factors constant. This decline occurs regardless of the reason for the prior CEO's departure. Similar but smaller declines occur following turnovers of CFOs. The spreads are more sensitive to CEO turnover and tenure when the prior uncertainty about the incoming CEO's ability is likely to be higher: when he is not an heir apparent, is an outsider, is younger, or when he does not have a prior relationship with the lender. The spread-tenure sensitivity is also higher when the firm has a higher default risk and when the debt claim is riskier. These patterns are consistent with the view that the decline in spreads in a manager's first three years of tenure reflects the resolution of uncertainty about management. Firms adjust their propensities to issue external debt, precautionary cash holding, and reliance on internal funds in response to these short-term increases in borrowing costs early in their CEOs' tenure.
{"title":"Management Risk and the Cost of Borrowing","authors":"Yihui Pan, T. Wang, M. Weisbach","doi":"10.2139/ssrn.2641923","DOIUrl":"https://doi.org/10.2139/ssrn.2641923","url":null,"abstract":"Risk generated by uncertainty about future management policies appears to affect firms' cost of borrowing. In a sample of S&P 1500 firms between 1987 and 2012, CDS spreads, loan spreads and bond yield spreads all decline over the first three years of CEO tenure, holding other macroeconomic, firm, and security level factors constant. This decline occurs regardless of the reason for the prior CEO's departure. Similar but smaller declines occur following turnovers of CFOs. The spreads are more sensitive to CEO turnover and tenure when the prior uncertainty about the incoming CEO's ability is likely to be higher: when he is not an heir apparent, is an outsider, is younger, or when he does not have a prior relationship with the lender. The spread-tenure sensitivity is also higher when the firm has a higher default risk and when the debt claim is riskier. These patterns are consistent with the view that the decline in spreads in a manager's first three years of tenure reflects the resolution of uncertainty about management. Firms adjust their propensities to issue external debt, precautionary cash holding, and reliance on internal funds in response to these short-term increases in borrowing costs early in their CEOs' tenure.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"218 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115521202","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Italian Abstract: Il paper indaga la relazione tra l’adozione di buone pratiche di gestione del rischio e la performance e la rischiosita delle banche italiane. In particolare, l’obiettivo della ricerca e capire se una risk governance strutturata possa aiutare le banche ad aumentare la propria performance e la stabilita dei loro risultati. L’analisi si focalizza sui 21 gruppi bancari italiani quotati e copre un orizzonte d’indagine compreso tra il 2005 e il 2014, differenziandosi dagli studi precedenti che considerano principalmente il mercato americano ed europeo e si basano su dati meno aggiornati.I risultati evidenziano che le scelte di risk management e risk governance delle banche italiane possono influenzare le loro performance e il rischio associato. Le evidenze empiriche suggeriscono che la scelta di dotarsi di un Cro non e indice di successo in termini di redditivita o di contenimento dei rischi. E, invece, l’attivita del Comitato Rischi che si dimostra efficace nel permettere una maggiore solidita della banca stessa, che si manifesta in una riduzione della variabilita dei risultati, sia in termini di redditivita che di rischio.English Abstract: The paper investigates the relation between the adoption of good practices in risk management and the level of performance and riskiness of banks. In particular, we aim at understanding if the application of the Enterprise Risk Management approach to banks helps increasing their stability. We test the hypothesis that those banks using an integrated risk management approach have, ceteris paribus, a lower level of risk and a higher performance. Our analysis focuses on 21 Italian listed banking groups, in the time period 2005-2014. Our preliminary results show that the risk management function influences the risk and performance of the bank; however, it is not possible from our data to define an optimal model of risk governance.
{"title":"Risk Governance and Performance of the Italian Banks: An Empirical Analysis","authors":"Elisa Cavezzali, Gloria Gardenal","doi":"10.2139/ssrn.2684516","DOIUrl":"https://doi.org/10.2139/ssrn.2684516","url":null,"abstract":"Italian Abstract: Il paper indaga la relazione tra l’adozione di buone pratiche di gestione del rischio e la performance e la rischiosita delle banche italiane. In particolare, l’obiettivo della ricerca e capire se una risk governance strutturata possa aiutare le banche ad aumentare la propria performance e la stabilita dei loro risultati. L’analisi si focalizza sui 21 gruppi bancari italiani quotati e copre un orizzonte d’indagine compreso tra il 2005 e il 2014, differenziandosi dagli studi precedenti che considerano principalmente il mercato americano ed europeo e si basano su dati meno aggiornati.I risultati evidenziano che le scelte di risk management e risk governance delle banche italiane possono influenzare le loro performance e il rischio associato. Le evidenze empiriche suggeriscono che la scelta di dotarsi di un Cro non e indice di successo in termini di redditivita o di contenimento dei rischi. E, invece, l’attivita del Comitato Rischi che si dimostra efficace nel permettere una maggiore solidita della banca stessa, che si manifesta in una riduzione della variabilita dei risultati, sia in termini di redditivita che di rischio.English Abstract: The paper investigates the relation between the adoption of good practices in risk management and the level of performance and riskiness of banks. In particular, we aim at understanding if the application of the Enterprise Risk Management approach to banks helps increasing their stability. We test the hypothesis that those banks using an integrated risk management approach have, ceteris paribus, a lower level of risk and a higher performance. Our analysis focuses on 21 Italian listed banking groups, in the time period 2005-2014. Our preliminary results show that the risk management function influences the risk and performance of the bank; however, it is not possible from our data to define an optimal model of risk governance.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128233958","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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