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Corporate risk management and firm value: evidence from the UK market

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Corporate risk management and firm value : evidence from the UK market. / Panaretou, Argyro.

In: European Journal of Finance, Vol. 20, No. 12, 12.2014, p. 1161-1186.

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Panaretou, Argyro. / Corporate risk management and firm value : evidence from the UK market. In: European Journal of Finance. 2014 ; Vol. 20, No. 12. pp. 1161-1186.

Bibtex

@article{124b1a3e2ba14ae98ca01e09c3f21394,
title = "Corporate risk management and firm value: evidence from the UK market",
abstract = "The paper evaluates the effect of corporate risk management activities on firm value, using a sample of large UK non-financial firms. Following recent changes in financial reporting standards, we are able to collect detailed information on risk management activities from audited financial reports. This enables us to gain a better understanding of risk management practices and to investigate value implications of different types of hedging. Overall 86.88% of the firms in the sample use derivatives to manage at least one type of price risk. The hedging premium is statistically and economically significant for foreign currency derivative users, while we provide weak evidence that interest rate hedging increases firm value. The extent of hedging and the hedging horizon have an impact on the hedging premium, whereas operational risk management activities do not significantly influence the market value of the firm.",
keywords = "risk management, hedging, firm value, derivatives",
author = "Argyro Panaretou",
year = "2014",
month = dec
doi = "10.1080/1351847X.2013.766625",
language = "English",
volume = "20",
pages = "1161--1186",
journal = "European Journal of Finance",
issn = "1351-847X",
publisher = "Routledge",
number = "12",

}

RIS

TY - JOUR

T1 - Corporate risk management and firm value

T2 - evidence from the UK market

AU - Panaretou, Argyro

PY - 2014/12

Y1 - 2014/12

N2 - The paper evaluates the effect of corporate risk management activities on firm value, using a sample of large UK non-financial firms. Following recent changes in financial reporting standards, we are able to collect detailed information on risk management activities from audited financial reports. This enables us to gain a better understanding of risk management practices and to investigate value implications of different types of hedging. Overall 86.88% of the firms in the sample use derivatives to manage at least one type of price risk. The hedging premium is statistically and economically significant for foreign currency derivative users, while we provide weak evidence that interest rate hedging increases firm value. The extent of hedging and the hedging horizon have an impact on the hedging premium, whereas operational risk management activities do not significantly influence the market value of the firm.

AB - The paper evaluates the effect of corporate risk management activities on firm value, using a sample of large UK non-financial firms. Following recent changes in financial reporting standards, we are able to collect detailed information on risk management activities from audited financial reports. This enables us to gain a better understanding of risk management practices and to investigate value implications of different types of hedging. Overall 86.88% of the firms in the sample use derivatives to manage at least one type of price risk. The hedging premium is statistically and economically significant for foreign currency derivative users, while we provide weak evidence that interest rate hedging increases firm value. The extent of hedging and the hedging horizon have an impact on the hedging premium, whereas operational risk management activities do not significantly influence the market value of the firm.

KW - risk management

KW - hedging

KW - firm value

KW - derivatives

U2 - 10.1080/1351847X.2013.766625

DO - 10.1080/1351847X.2013.766625

M3 - Journal article

VL - 20

SP - 1161

EP - 1186

JO - European Journal of Finance

JF - European Journal of Finance

SN - 1351-847X

IS - 12

ER -