Risk disclosure on shareholder value

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Reference no: EM132374944

The individual and joint effects of enterprise risk management (ERM) and risk disclosure on shareholder value

The purpose of this research project is to improve our understanding of shareholder value by examining to what extent enterprise risk management (proxied by the existence of a Chief Risk Officer (CRO) in a firm; see Bohnert et al., 2019) and risk disclosure (operationalized based on content analysis of Management Discussion and Analysis (MD&A) sections of 10-K filings; see Kravet and Muslu, 2013) are related to shareholder value (in terms of Total Q; see Peters and Taylor, 2017), when controlling for the influence of (at least) return on assets (ROA), leverage, sales growth, firm size and industry.

For this assignment, you will randomly select 200 U.S. listed firms from the S&P 1500 list (excluding financial institutions (SIC 6000-6999) and regulated industries (SIC 4400-5000)). For these firms, you will collect data on the above mentioned variables for the year 2015. Next, you will first explore the data, and then examine the extent to which enterprise risk management and risk disclosure are individually and jointly related to shareholder value.

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The paper consist of analysis of enterprise risk management and its impact on shareholders value. The controlling variables are sales, ROA, leverage and firm size of 200 companies. The data collected from 200 listed companies in S & P through annual reports and the company’s website. The objectives, purpose, and method to be sued discussed in the paper. The analysis portion indicates that the controlling variables have a strong influence on shareholders’ value and maximizing wealth. The calculated values are given below in the appendix.

Reference no: EM132374944

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