Strategic Risk Management and Corporate Value Creation

Torben Juul Andersen, Oliviero Roggi

    Research output: Contribution to conferencePaperResearchpeer-review

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    Abstract

    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.
    Original languageEnglish
    Publication date2012
    Number of pages30
    Publication statusPublished - 2012
    EventStrategic Management Society 32nd Annual International Conference. SMS 2012 - Prague, Czech Republic
    Duration: 6 Oct 20129 Oct 2012
    Conference number: 32
    http://prague.strategicmanagement.net/

    Conference

    ConferenceStrategic Management Society 32nd Annual International Conference. SMS 2012
    Number32
    CountryCzech Republic
    CityPrague
    Period06/10/201209/10/2012
    Internet address

    Bibliographical note

    CBS Library does not have access to the material

    Cite this

    Andersen, T. J., & Roggi, O. (2012). Strategic Risk Management and Corporate Value Creation. Paper presented at Strategic Management Society 32nd Annual International Conference. SMS 2012, Prague, Czech Republic.
    Andersen, Torben Juul ; Roggi, Oliviero. / Strategic Risk Management and Corporate Value Creation. Paper presented at Strategic Management Society 32nd Annual International Conference. SMS 2012, Prague, Czech Republic.30 p.
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    Andersen, TJ & Roggi, O 2012, 'Strategic Risk Management and Corporate Value Creation' Paper presented at, Prague, Czech Republic, 06/10/2012 - 09/10/2012, .

    Strategic Risk Management and Corporate Value Creation. / Andersen, Torben Juul; Roggi, Oliviero.

    2012. Paper presented at Strategic Management Society 32nd Annual International Conference. SMS 2012, Prague, Czech Republic.

    Research output: Contribution to conferencePaperResearchpeer-review

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    T1 - Strategic Risk Management and Corporate Value Creation

    AU - Andersen, Torben Juul

    AU - Roggi, Oliviero

    N1 - CBS Library does not have access to the material

    PY - 2012

    Y1 - 2012

    N2 - 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.

    AB - 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.

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    KW - Organizational slack

    KW - Strategic response capabilities

    M3 - Paper

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    Andersen TJ, Roggi O. Strategic Risk Management and Corporate Value Creation. 2012. Paper presented at Strategic Management Society 32nd Annual International Conference. SMS 2012, Prague, Czech Republic.