Strategic Risk Management and Corporate Value Creation

Torben Juul Andersen, Oliviero Roggi

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    Abstrakt

    Major corporate failures, periodic recessions, regional debt crises and volatile markets have intensified the focus on corporate risk management as the means to deal better with turbulent business conditions. Hence, the ability to respond effectively to the often dramatic environmental changes is considered an important source of competitive advantage. However, surprisingly little research has analyzed if the presumed advantages of effective risk management lead to superior performance or assessed important antecedents of effective risk management capabilities. Here we present a comprehensive study of risk management effectiveness and the relationship to corporate performance based on panel data for more than 3,400 firms accounting for over 33,500 annual observations during the turbulent period 1991-2010. Determining effective risk management as the ability to reduce earnings and cash flow volatility, we find that it has significant positive relationships to lagged performance measures after controlling for industry effects and company size. We also find that availability of slack resources and investment commitments affect the risk management capabilities and their relationship to performance.
    OriginalsprogEngelsk
    Publikationsdato2012
    Antal sider30
    StatusUdgivet - 2012
    BegivenhedStrategic Management Society 32nd Annual International Conference. SMS 2012 - Prague, Tjekkiet
    Varighed: 6 okt. 20129 okt. 2012
    Konferencens nummer: 32
    http://prague.strategicmanagement.net/

    Konference

    KonferenceStrategic Management Society 32nd Annual International Conference. SMS 2012
    Nummer32
    LandTjekkiet
    ByPrague
    Periode06/10/201209/10/2012
    Internetadresse

    Emneord

    • Corporate risk management
    • Organizational slack
    • Strategic response capabilities

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