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Risk Management Theory: A comprehensive empirical assessment

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  • Klimczak, Karol Marek

Abstract

The aim of this paper is to develop a methodology for thorough empirical testing of major contemporary corporate risk management theories: financial theory, agency theory, stakeholder theory and new institutional economics. Unlike in previous research, the tests are organised around theories, rather than individual hypotheses. I used a number of tests for robustness and subjected hypotheses to repeated testing, cross-verifying results. Evidence of tests conducted on a sample of 150 companies listed at the Warsaw Stock Exchange in Poland, covering years from 2001 to 2005, clearly point to low empirical verification of all theories considered. However, I find evidence for some theoretical determinants: currency exposure, market-to-book value, IT and service sectors and size. In conclusion I suggest implications for future empirical and conceptual research.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 4241.

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Date of creation: 23 Jul 2007
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Handle: RePEc:pra:mprapa:4241

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Keywords: corporate risk management; hedging; derivatives; CART;

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