Risk

Why do foreign firms have less idiosyncratic risk than U.S. firms?

Competition Theory of Risk Management Failures

We study a model in which firms compete preemptively for trading opportunities and risk management introduces latency in trading. As the time pressure...

Career Risk and Market Discipline in Asset Management

We establish that the labor market helps discipline asset managers via the impact of fund liquidations on their careers. Using hand-collected data on...

ESG Shareholder Engagement and Downside Risk

We show that engagement on environmental, social, and governance issues can benefit shareholders by reducing firms’ downside risks. We find that the...

Use of AI by Financial Players: The Emerging Evidence

Financial supervisors as well as financial intermediaries increasingly rely on AI. However, little remains known about the scope and...

Banks, Government Bonds, and Default: What do the Data Say?

We analyze holdings of public bonds by over 20,000 banks in 191 countries, and the role of these bonds in 20 sovereign defaults over 1998-2012. Banks hold...

Corporate Social Responsibility and Firm Risk: Theory and Empirical Evidence

This paper presents an industry equilibrium model where firms have a choice to engage in corporate social responsibility (CSR) activities. We model CSR...

It's Not So Bad: Director Bankruptcy Experience and Corporate Risk-Taking

We show that firms take more (but not necessarily excessive) risks when one of their directors experiences a corporate bankruptcy at another firm where...

Risk Mitigating versus Risk Shifting: Evidence from Banks Security Trading in Crises

We show that risk-mitigating incentives dominate risk-shifting incentives in fragile banks. We study security trading by banks, as banks can easily...

Labor Representation in Governance as an Insurance Mechanism

We hypothesize that labor participation in governance helps improve risk sharing between employees and employers. It provides an ex-post mechanism to...

Mandatory Governance Reform and Corporate Risk Management

Using the Sarbanes-Oxley Act of 2002 as a quasi-natural experiment to identify the impact of corporate governance reform on foreign exchange risk...

Mandatory Corporate Climate Disclosures: Now, but How?

Mitigating the worst consequences of climate change by transitioning to a net zero economy requires investment on a large scale. Directly pricing...