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How do Croatian Companies make Corporate Risk Management Decisions: Evidence from the Field


  • Danijela Miloš

    () (Faculty of Economics and Business, University of Zagreb)


According to the Capital Asset Pricing Model and the Modigliani-Miller theorem, corporate risk management is irrelevant to the value of the firm. However, it is apparent that managers are constantly engaged in hedging activities that are directed at the reduction of corporate risks. As an explanation for this clash between theory and practice, imperfections in the capital market are used to argue for the relevance of corporate risk management function. This paper analyses corporate risk management practices and decision to hedge in large Croatian non-financial companies. It explores if decision to hedge corporate risks in the analysed companies is a function of several firm’s characteristics that have been proven as relevant in making risk management decisions.

Suggested Citation

  • Danijela Miloš, 2007. "How do Croatian Companies make Corporate Risk Management Decisions: Evidence from the Field," EFZG Working Papers Series 0713, Faculty of Economics and Business, University of Zagreb.
  • Handle: RePEc:zag:wpaper:0713

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    More about this item


    corporate risk management decision; hedging rationales; shareholder value maximisation; managers’ private utility maximisation; large Croatian non-financial companies;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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