IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Are exogenous requirements sufficient to induce corporate risk management activities?

Listed author(s):
  • Ales Berk
  • Igor Loncarski

This article reports the current practices of risk management in Slovenian companies and relates the incentives for risk management in the country's post-transitional legal and business environment to the neoclassical theoretical motives for risk management. We find that in such an environment, which more or less characterises most Eastern European countries, neoclassical theoretical motives do not provide sufficient (endogenous) incentives for shareholders and managers to manage risk within their firms. We argue that the compulsory use of International Financial Reporting Standard (IFRS) disclosure requirements induces managers to actively analyse and manage risks. We see this exogenous push as a necessary but unfortunately not a sufficient mechanism to induce managers to manage risk within their firms since managers perceive the reporting requirements primarily as cost-enhancing. We argue that, in order to endogenise the incentives, governments need to create market conditions in which managers will also see the added value of risk management. This will require predominantly a change in corporate governance mechanisms.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal Post-Communist Economies.

Volume (Year): 23 (2011)
Issue (Month): 1 ()
Pages: 119-137

in new window

Handle: RePEc:taf:pocoec:v:23:y:2011:i:1:p:119-137
DOI: 10.1080/14631377.2011.546994
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:taf:pocoec:v:23:y:2011:i:1:p:119-137. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.