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

Panaretou, Argyro

doi:10.1080/1351847x.2013.766625

Cited by 55 publications

(43 citation statements)

References 47 publications

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“…The papers by Judge (2006), Belghitar et al (2008), and Panaretou (2014) are the closest to ours in a UK context. However, these papers differ from ours in several important respects.…”

Section: Accepted Manuscriptsupporting

confidence: 62%

“…The distinction between the types of derivatives users and non-users, and their monitoring environments is economically important in three respects. First, more firms use currency derivatives than IR derivatives and more large firms use derivatives than small firms (Bodnar et al, 1996;Panaretou, 2014). Second, the use of derivatives carries substantial financial risks.…”

Section: Accepted Manuscriptmentioning

confidence: 99%

“…Firms hedge to preserve growth options, dividends, and sales (Lessard, 1991;Froot et al, 1993). Finally, derivatives usage is related to size (Bodnar et al, 1996;Panaretou, 2014), which is measured using LnMarket Value and LnTotal Sales.…”

Section: Hedging Substitutes and Derivatives Usagementioning

confidence: 99%

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Monitoring mechanisms, managerial incentives, investment distortion costs, and derivatives usage

Huang

Joseph

et al. 2018

The British Accounting Review

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We relate derivatives usage to the level of corporate governance/monitoring mechanisms, managerial incentives and investment decisions of UK firms. We find evidence to suggest that the monitoring environment, e.g., board size, influences the use of both currency and interest rate derivatives usage. Managerial compensation also influences derivatives usage. Investment decisions are affect by the governance and managerial compensation of firms, which in turn impact on derivatives usage. We find a strong tendency for UK firms to reduce derivatives usage in situations where derivatives usage should be increased. There is limited evidence that firms use hedging substitutes to avoid monitoring from external capital markets.

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“…The papers by Judge (2006), Belghitar et al (2008), and Panaretou (2014) are the closest to ours in a UK context. However, these papers differ from ours in several important respects.…”

Section: Accepted Manuscriptsupporting

confidence: 62%

Section: Accepted Manuscriptmentioning

confidence: 99%

See 1 more Smart Citation

Monitoring mechanisms, managerial incentives, investment distortion costs, and derivatives usage

Huang

Joseph

et al. 2018

The British Accounting Review

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“…9 For example, a widely cited 1998 survey demonstrated that a surprisingly small percentage of firms engage in any hedging activities (Bodnar, Hayt and Marston, 1998 Figure 3). More specifically, only around 20% of UK FTSE350 firms hedged using commodity derivatives in 2010 (Panaretou, 2014, Table 1) Consumers are also affected by commodity price changes, in particular due to their expenditure on fuel and food. Thus if hedging isas it seemsincomplete, investors in the cross-section should demand, as we hypothesize, a premium for holding commodity risk.…”

Section: Introductionmentioning

confidence: 99%

Commodity risks and the cross-section of equity returns

Brooks

Fernández-Pérez

Miffre

et al. 2016

The British Accounting Review

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The article examines whether commodity risk is priced in the cross-section of global equity returns. We employ a long-only equally-weighted portfolio of commodity futures and a term structure portfolio that captures phases of backwardation and contango as mimicking portfolios for commodity risk. We find that equity-sorted portfolios with greater sensitivities to the excess returns of the backwardation and contango portfolio command higher average excess returns, suggesting that when measured appropriately, commodity risk is pervasive in stocks. Our conclusions are robust to the addition to the pricing model of financial, macroeconomic and business cycle-based risk factors.

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“…For determining the firm size, the natural logarithm of the total assets will be used. (Panaretou, 2014;Ayturk et al, 2016;Aggarwal & Padhan, 2017).…”

Section: Company Sizementioning

confidence: 99%

Impact of Financial Leverage, Size and Assets Structure on Firm Value: Evidence from Industrial Sector, Jordan

Al-Slehat¹

2019

IBR

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The present study aims at revealing the financial leverage, Size, and asset structure and its impact on the values of firms. The researcher used the analytical method approach for a sample of 13 firms from the mining and extraction industry sector listed on the Amman stock exchange of the period 2010-2018.The model of simple line regression was used for testing the hypotheses of the study by using both programs of (E-views, STATA) in addition to both programs of unit root test and variance inflation factor to make sure of the data stability and no relationship between variables. The study concluded the non-existence of the impact of financial leverage on the firm value and the relationship between the financial leverage and Tobin’s q scale was negative. However, there was an impact of each size and asset structure on firm value and the relationship between the natural logarithm of size and asset structure was positive with Tobin’s q. The study recommends that Companies must achieve an optimal mixture of debt and equity, for long-term survival and hence the growth of the company.

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

Cited by 55 publications

References 47 publications

Monitoring mechanisms, managerial incentives, investment distortion costs, and derivatives usage

Monitoring mechanisms, managerial incentives, investment distortion costs, and derivatives usage

Commodity risks and the cross-section of equity returns

Impact of Financial Leverage, Size and Assets Structure on Firm Value: Evidence from Industrial Sector, Jordan

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