Several indicators and univariate ratios can be used to measure the soundness of firms as reflected in their balance sheets (leverage, profitability, liquidity ratio, etc.). However, each indicator alone cannot measure a firm's overall financial risk or financial distress level. In this study,...

Using a hand-collected executive pension database, we study how both CEO and non-CEO executive compensation structures affect the overall risk of a firm. We accomplish three major objectives: (i) we provide a significant extension of the Sundaram and Yermack (2007) research framework by...

Derivatives enjoy special status in bankruptcy: They are exempt from the automatic stay and effectively senior to virtually all other claims. We propose a corporate finance model to assess the effect of these exemptions on a firm's cost of borrowing and its incentives to engage in efficient...

Using information on the sales of debt claims for 132 U.S. Chapter 11 bankruptcy cases, we show that large trade creditors' decisions to sell receivables of a distressed company in bankruptcy are predictive of lower recovery rates, and that in such cases these creditors sell ahead of less...

Using a unique dataset consisting of firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, firms that remain private over the same period and companies which have been listed for at least 10 years, we investigate whether going public is riskier than remaining...

Purpose – This study develops a non-traditional measure of risk, an Exposure-Based Volatility, for the non-financial company and applies this measure to capture both the downside potential of cash flows and the probability of requiring additional external financing under most foreseeable...

We investigate how firms manage financial default risk (on debt) and operational default risk (on delivery obligations). Financially constrained firms reduce operational hedging through inventory and supply chain in favor of cash holdings. Our model predicts that firms' markup increases with...

Recent research about the financial behaviour of Slovenian firms has documented enterprise risk management as being one of its weakest areas. The goal of this article is to present insights into financial risk management, i.e. into the extent of the use of derivatives in the largest Slovenian...

Recent research about the financial behaviour of Slovenian firms has documented enterprise risk management as being one of its weakest areas. The goal of this article is to present insights into financial risk management, i.e. into the extent of the use of derivatives in the largest Slovenian...

This paper revisits the performance of frequently used risk forecasting methods, such as the Value-at-Risk models. The aim is to analyze its performance, and mitigate its pitfalls by incorporating conditional variance estimates, as generated by a GARCH model. Notably, this paper tests several...