underpricing and strategic disclosure as potential hedges against litigation risk. This tradeoff explains a significant fraction of …. Underwriters who fail to adequately hedge litigation risk experience economically large penalties including loss of market share. …

Recent empirical evidence suggests that the variance risk premium, or the difference between risk-neutral and … similar to the pattern previously documented for the U.S. Defining a "global" variance risk premium, we uncover even stronger … compensation for world-wide variance risk to be the same across countries. Our findings are broadly consistent with the …

High-powered incentives may induce higher managerial effort, but they also expose managers to idiosyncratic risk. If … managers are risk averse, they might underinvest when firm-specific uncertainty increases, leading to suboptimal investment … decisions from the perspective of well-diversified shareholders. We empirically document that when idiosyncratic risk rises …

We find that firm-level variance risk premium, estimated as the difference between option-implied and expected … variances, has a prominent explanatory power for credit spreads in the presence of market- and firm-level risk control variables … provide further evidence that: (1) variance risk premium has a cleaner systematic component and Granger-causes implied and …

portfolio size and degree of risk aversion of potential investors, the ability to borrow, and the hedging opportunities provided …

"correlation breakdown." As a result, risk managers worry that their hedges will be useless when they are most needed, namely …. We make this point analytically, by way of several numerical examples, and via an empirical illustration. ; But, risk …

Risk management information systems are designed to overcome the problem of aggregating data across diverse trading … units. The design of an information system depends on the risk measurement methodology that a firm chooses. Inherent in the … design of both a risk management information system and a risk measurement methodology is a tradeoff between the accuracy of …