We examine the role of acquirers’ familiarity with targets’ significant downside risks in M&A. We introduce a measure of a firm’s familiarity with another firm’s business downsides using similarity of their risk factor descriptions. We first show that this measure is distinct from...

Investors are becoming more sensitive about returns and losses, especially when the investments are exposed to downside risk potential in the financial markets. Despite the computational intensity of the downside risk measures, they are very widely applied to construct a portfolio and evaluate...

Recent studies have underscored the need for market participants to develop reliable methods of measuring risk. One increasingly popular technique is the use of "value-at-risk" models, which convey estimates of market risk for an entire portfolio in one number. The author explores how well these...