We investigate whether corporate finance incentives affect the extent of corporate hedging with property insurance. Using a database that contains detailed insurance information, we show that firms buy property insurance to reduce the expected costs of distress. Further, we document a scale...

This paper studies the effects of hedge disclosure requirements on corporate risk management and product market competition. The analysis is based on a simple model of market entry and shows that incumbent firms engage in risk management when these activities remain unobserved by outsiders. The...

The paper studies risk mitigation associated with capital regulation, in a context when banks may choose tail risk assets. We show that this undermines the traditional result that higher capital reduces excess risk-taking driven by limited liability. When capital raising is costly, poorly...

We estimate a Pareto distribution for loan losses, as an alternative to the commonly used Vasicek distribution, using simulated data. A key assumption in the construction of Vasicek distribution is that firm-level risk is idiosyncratic. It also assumes that firm exposure to systemic risk is...

During 2008, the sudden widening of credit spreads led to a rapid decrease in the value of many financial assets, revealing a general shortage of capital for many financial institutions, with some critical peaks that required fund injection and public bailouts.The evidence of a substantial...

Firms face uncertain financing conditions, which can be quite severe as exemplified by the recent financial crisis. We capture the firm's precautionary cash hoarding and market timing motives in a tractable model of dynamic corporate financial management when external financing conditions are...

The paper explores how the adoption of enterprise risk management (ERM) practices influences external audit fees in large pharmaceutical firms. The results show that the mere presence of a Chief Risk Officer does not influence external audit fees. However, when we take the different ERM...

In this paper we report the current practices of risk management in Slovenian companies and relate the incentives for risk management in the country's post-transitional legal and business environment to the neoclassical theoretical motives for risk management. We find that in such an...

The objective of this study was to evaluate the level of ERM implementation in Brazilian companies, comparing it to the results found in American companies (Desender, 2007), as well as to find out the influence of ERM in the companies' corporate governance. We observed the following: companies...

In this paper we report current practices of risk management in Slovenian companies and relate the incentives for risk management in post-transitional legal and business environment to the neoclassical theoretical motives for risk management. We find that in such environment, which more or less...