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

Panaretou, Argyro (2014) Corporate risk management and firm value:evidence from the UK market. European Journal of Finance, 20 (12). pp. 1161-1186. ISSN 1351-847X

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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.

Item Type:
Journal Article
Journal or Publication Title:
European Journal of Finance
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2001
Subjects:
ID Code:
61795
Deposited By:
Deposited On:
17 Jan 2013 16:23
Refereed?:
Yes
Published?:
Published
Last Modified:
26 Sep 2020 02:32