The determinants of corporate FX speculation – Why firms increase risk

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Andreas Hecht
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Estimation Errors ◽  
Accounting Data ◽  
Content Type ◽  
Proxy Variables ◽  
Empirically Supported ◽  
Novel Approach ◽  
Before And After ◽  
Data Granularity

PurposeEmpirical evidence on the determinants of corporate FX speculation is ambiguous. We note that the conflicting findings of prior studies could be the result of different methodologies in determining speculation. Using a novel approach to defining speculative activities, we seek to help solve the puzzle of the determinants of speculation and examine which firms engage in such activities and why they do so.Design/methodology/approachThis paper examines an unexplored regulatory environment that contains publicly reported FX risk data on the firms' exposures before and after hedging per year and currency. This unprecedented data granularity allows us to use actual reported volumes instead of proxy variables in defining speculation and to examine whether the convexity theories are empirically supported in FX risk management.FindingsWe find that frequent speculators are smaller, have more growth opportunities and possess lower internal resources, which indicates unprecedented empirical evidence for the convexity theories in FX risk management. Further, we provide evidence that corporate speculation might be linked to the application of hedge accounting.Practical implicationsWe help solve the questions of which and why firms engage in speculative activities. This can provide valuable information to various stakeholders such as financial analysts, investors, or regulators, which can help prevent imperiling corporate losses and curb excessive speculative financial activities.Originality/valueIn order to question the unresolved issue of the determinants of speculation, this paper is the first to use openly available accounting data with actual reported FX exposure information before and after hedging in defining speculation, instead of relying on proxy variables for FX exposure and derivative usage with potential estimation errors.

How do firms manage their interest rate exposure?

2019 ◽  
Vol 20 (5) ◽  
pp. 501-519 ◽  
Author(s):  
Andreas Hecht
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Cash Flow ◽  
Fair Value ◽  
Separate Analysis ◽  
Content Type ◽  
Financial Firms ◽  
Exposure Data ◽  
Before And After ◽  
Data Granularity

Purpose This paper aims to identify how non-financial firms manage their interest rate (IR) exposure. IR risk is complex, as it comprises the unequal cash flow and fair value risk. The paper is able to separate both risk types and investigate empirically how the exposure is composed and managed, and whether firms increase or decrease their exposure with derivative transactions. Design/methodology/approach The paper examines an unexplored regulatory environment that contains publicly reported IR exposure data on the firms’ exposures before and after hedging. The data were complemented by indicative interviews with four treasury executives of major German corporations, including two DAX-30 firms, to include professional opinions to validate the results. Findings The paper provides new empirical insights about how non-financial firms manage their interest rate exposure. It suggests that firms use hedging instruments to swap from fixed- to floating-rate positions predominantly in the short-to medium-term, and that 63 [37] per cent of IR firm exposure are managed using risk-decreasing [risk-increasing/-constant] strategies. Practical implications Interviewed treasury executives suggest that the advanced disclosures benefit various stakeholders, ranging from financial analysts and shareholders to potential investors through more meaningful analyses on firms’ risk management activities. Further, the treasury executives indicate that the new data granularity would enable firms to carry out unprecedented competitive analyses and thereby benchmark and improve their own risk management. Originality/value The paper is the first empirical study to analyze the interest rate activities of non-financial firms based on actually reported exposure data before and after hedging, rather than using proxy variables. In addition, the new data granularity enables a separate analysis of the cash flow and fair value risk to focus on the non-financial firms’ requirements.

Understanding the influence of lean and agile strategies on creating firms’ supply chain risk management capabilities

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Waqar Ahmed ◽  
Muhammad Zaki Rashdi
Keyword(s):  
Risk Management ◽  
Supply Chain ◽  
Empirical Evidence ◽  
Internal Control ◽  
Market Condition ◽  
Equation Modeling ◽  
Supply Chain Risk ◽  
Content Type ◽  
Management Capabilities ◽  
The Impact

Purpose Lean and agile strategies are two basic supply chain paradigms that strategist decouples based on their internal and external environment. This study aims to identify the influence of market orientation (MO) and quality management (QM) deployment on the supply chain strategies. Furthermore, this study also seeks empirical evidence of the impact of these core strategies on creating risk management capabilities. Design/methodology/approach Quantitative research technique is deployed to explain the phenomenon. The data was gathered through a structured scale questionnaire from supply chain professionals working at different manufacturing firms. Valid data of 134 respondents is then analyzed through partial least squares structural equation modeling for further empirical understanding. Findings The outcome of the research indicates that MO capability; as an external drive is a key to make an operational strategy. QM as an internal control is more prone to formulating a lean strategy (LS). Another important finding is that LS does not complement risk management capabilities especially in an uncertain market condition. Practical implications The study suggested concrete implications for risk management through the right mix of lean and agile supply chain strategies. There are some good insights for the supply chain policy-makers working in a developing country. Originality/value This study will provide empirical evidence for managing supply chain risk through an effective strategy making.

Trigeminal evoked potential—monitored thermorhizotomy: a novel approach for relief of trigeminal pain

1996 ◽  
Vol 84 (6) ◽  
pp. 929-939 ◽  
Author(s):  
Massimo Leandri ◽  
Alberto Gottlieb
Keyword(s):  
Evoked Potential ◽  
Trigger Points ◽  
Bipolar Electrode ◽  
Content Type ◽  
Motor Responses ◽  
Novel Approach ◽  
Before And After ◽  
Neurophysiological Data ◽  
Motor Root ◽  
Stimulation Of

✓ This paper presents a complete method for performing trigeminal thermorhizotomy, guided by neurophysiological data, to relieve tic douloureux. The method involves the use of trigeminal evoked potentials (TEPs) produced by stimulation of the supraorbital, infraorbital, and mental nerves and recorded from electrodes at both the scalp and the trigeminal nerve. To perform the thermorhizotomy, a cannula is modified to produce a concentric bipolar electrode that is suitable for both recording and lesion making. The operating procedure is divided into five steps: Step 1, recording of baseline scalp TEPs from the derivation of the cervical vertex to C-7 to ensure that all stimulating electrodes are correctly placed; Step 2, recording of TEPs from the trigeminal electrode after stimulation of the peripheral nerve trunks to ascertain the electrode's position relative to the root bundles; Step 3, fine positioning of the trigeminal electrode by recording the root activity evoked by stimulation of cutaneous trigger points or of the most painful areas; Step 4, assessing the position of the trigeminal electrode relative to the motor root by stimulating the nerve via the electrode and observing the masseter motor responses; and Step 5, recording scalp TEPs immediately before and after each thermolesion. Thermolesions are made until the scalp-recorded wave W2 decreases its amplitude by 20% to 50% of the original value or until it is delayed by 0.30 msec. This procedure has the potential to enable extremely precise monitoring of the position of the trigeminal electrode relative to the activated fibers and provides very effective monitoring of the extent of the lesion. The authors have performed this procedure with very satisfactory results in 30 patients with trigeminal neuralgia in the second branch.

Tempered stable models for Islamic finance asset management

2014 ◽  
Vol 7 (1) ◽  
pp. 37-60 ◽  
Author(s):  
Mahmoud Bekri ◽  
Young Shin (Aaron) Kim ◽  
Svetlozar (Zari) T. Rachev
Keyword(s):  
Risk Management ◽  
Stock Market ◽  
Empirical Evidence ◽  
Market Risk ◽  
Market Volatility ◽  
Risk Exposure ◽  
Islamic Finance ◽  
Content Type ◽  
Portfolio Manager ◽  
Safety First

Purpose – In Islamic finance (IF), the safety-first rule of investing (hifdh al mal) is held to be of utmost importance. In view of the instability in the global financial markets, the IF portfolio manager (mudharib) is committed, according to Sharia, to make use of advanced models and reliable tools. This paper seeks to address these issues. Design/methodology/approach – In this paper, the limitations of the standard models used in the IF industry are reviewed. Then, a framework was set forth for a reliable modeling of the IF markets, especially in extreme events and highly volatile periods. Based on the empirical evidence, the framework offers an improved tool to ameliorate the evaluation of Islamic stock market risk exposure and to reduce the costs of Islamic risk management. Findings – Based on the empirical evidence, the framework offers an improved tool to ameliorate the evaluation of Islamic stock market risk exposure and to reduce the costs of Islamic risk management. Originality/value – In IF, the portfolio manager – mudharib – according to Sharia, should ensure the adequacy of the mathematical and statistical tools used to model and control portfolio risk. This task became more complicated because of the increase in risk, as measured via market volatility, during the financial crisis that began in the summer of 2007. Sharia condemns the portfolio manager who demonstrates negligence and may hold him accountable for losses for failing to select the proper analytical tools. As Sharia guidelines hold the safety-first principle of investing rule (hifdh al mal) to be of utmost importance, the portfolio manager should avoid speculative investments and strategies that would lead to significant losses during periods of high market volatility.

Risk management in residential projects in the United States: Implementation status, evaluation techniques and barriers

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Simon Adamtey ◽  
James Ogechi Kereri
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Construction Projects ◽  
Multinomial Logistic Regression ◽  
The United States ◽  
The Body ◽  
Content Type ◽  
General Contractors ◽  
The Impact ◽  
Residential Projects

Purpose Residential projects frequently suffer from low-risk management (RM) implementation and, consequently, are more likely to fail to meet performance objectives. With RM becoming an essential requirement, the purpose of this study is to investigate RM implementation in terms of status, risk analysis techniques, barriers and impact of RM on residential projects across the USA. Design/methodology/approach Data were collected from 105 general contractors who had completed 3,265 residential projects in the past five years. Data collection was through a US national survey sent out through emails between August and November 2019 to residential general contractor firms. The firms were randomly selected from national organizations, such as the National Association of Home Builders, Associated General Contractors of America and Associated Builders and Contractors. Findings The analysis indicated that RM implementation is still extremely low at 22.27%. However, there was an increase in RM implementation as the cost and duration of projects increased. Direct judgment is the most used technique. Also, the one-sample t-test indicated that the barriers have a significant impact on RM implementation. Multinomial logistic regression results indicated that the impact of lack of management support, lack of money or budget, the complexity of analytical tools and lack of time to perform analysis predict the impact on the overall performance of construction projects. Overall, the results provide empirical evidence, which can influence management’s decision-making regarding RM and improve implementation in residential projects. Originality/value There is a lack of empirical evidence on the impact of barriers to RM implementation on the performance of construction projects. This research contributes to the body of knowledge by bridging this gap through a robust analysis of data collected from real residential projects.

Why do firms adopt enterprise risk management (ERM)? Empirical evidence from France

2016 ◽  
Vol 54 (8) ◽  
pp. 1886-1907 ◽  
Author(s):  
Majid Jamal Khan ◽  
Dildar Hussain ◽  
Waqar Mehmood
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Survival Data ◽  
Proportional Hazards Model ◽  
Enterprise Risk Management ◽  
Cox Proportional Hazards Model ◽  
Annual Reports ◽  
Management Approach ◽  
Content Type ◽  
Enterprise Risk

Purpose Enterprise risk management (ERM) is a risk management approach that calls for integrating all the organization-wide risks and takes a portfolio view point of managing organizational risks. The purpose of this paper is to investigate the factor that influence a firm’s decision to adopt ERM. Design/methodology/approach The authors employ a particular technique of survival data analysis, the Cox proportional hazards model, to investigate the factors that lead towards the decision of initiating an ERM programme. The authors constructed a unique sample of French firms derived from the information in 315 corporate news announcements for the hiring of a chief risk officer and information retrieved from publicly available annual reports to identify firms that initiated an ERM programme, over the period from year 1999 to 2008. Findings The results suggest that besides the growing international and local regulatory pressure, factors that are internal to the organizations like the expected probability of financial distress and its explicit and implicit costs, poor earnings performance and the existence of growth opportunities play vital role in motivating firms to adopt ERM. It was also found that corporate governance practices such as the independence of the board may also lead towards an initiation of the ERM. Originality/value This study makes theoretical and methodological contribution the ERM literature by employing a novel methodology and presenting empirical evidence based on data form French firms.

Five Popular Study Strategies: Their Pitfalls and Optimal Implementations

2018 ◽  
Vol 13 (3) ◽  
pp. 390-407 ◽  
Author(s):  
Toshiya Miyatsu ◽  
Khuyen Nguyen ◽  
Mark A. McDaniel
Keyword(s):  
Empirical Evidence ◽  
Study Strategies ◽  
Present Review ◽  
Educational Practices ◽  
Study Strategy ◽  
Empirically Supported ◽  
Novel Approach ◽  
Cognitive Principles ◽  
Optimal Implementation

Researchers’ and educators’ enthusiasm in applying cognitive principles to enhance educational practices has become more evident. Several published reviews have suggested that some potent strategies can help students learn more efficaciously. Unfortunately, for whatever reason, students do not report frequent reliance on these empirically supported techniques. In the present review, we take a novel approach, identifying study strategies for which students have strong preferences and assessing whether these preferred strategies have any merit given existing empirical evidence from the cognitive and educational literatures. Furthermore, we provide concrete recommendations for students, instructors, and psychologists. For students, we identify common pitfalls and tips for optimal implementation for each study strategy. For instructors, we provide recommendations for how they can assist students to more optimally implement these study strategies. For psychologists, we highlight promising avenues of research to help augment these study strategies.

The influence of integrated reporting and stakeholder information needs on the disclosure of social information in a state-owned enterprise

2019 ◽  
Vol 27 (4) ◽  
pp. 556-579 ◽  
Author(s):  
Federica Farneti ◽  
Federica Casonato ◽  
Monica Montecalvo ◽  
Charl de Villiers
Keyword(s):  
Empirical Evidence ◽  
Information Needs ◽  
Single Case ◽  
Social Information ◽  
Annual Reports ◽  
Structured Interviews ◽  
Integrated Reporting ◽  
Content Type ◽  
Stakeholder Relations ◽  
Before And After

Purpose The purpose of this study is to examine how social disclosures are influenced by the adoption of integrated reporting (IR), focusing on the three social capitals in the international IR framework, namely, intellectual, human and social and relationship capital. Design/methodology/approach This study takes the form of a single case study involving content analyses of annual reports and integrated reports from 2009 to 2017 (i.e. before and after IR adoption in 2013), as well as in-depth, semi-structured interviews with key preparers of the integrated report at New Zealand Post, to study changes in disclosures towards different stakeholder groups, from an internal organisation perspective. The empirical evidence is analysed through the lens of stakeholder theory. Findings This study provides empirical evidence that contributes to our understanding of IR’s influence on the disclosure of social information and enhanced stakeholder relations in a public sector context. The study shows that the IR framework promoted a materiality assessment approach with stakeholders, which led to a reduction in social disclosures, while the materiality focus led to the disclosure of social matters more relevant to stakeholders. Social implications IR led to meaningful stakeholder engagement, which led to social disclosure that are more relevant to stakeholders. Originality/value This study assesses the influence of IR on social disclosures. The findings will be of interest to organisations seeking to enhance stakeholder relations and/or undertake IR and/or social disclosures.

A novel approach to emergency risk assessment using FMEA with extended MULTIMOORA method under interval-valued Pythagorean fuzzy environment

2020 ◽  
Vol 13 (1) ◽  
pp. 41-65 ◽  
Author(s):  
Huimin Li ◽  
Lelin Lv ◽  
Feng Li ◽  
Lunyan Wang ◽  
Qing Xia
Keyword(s):  
Risk Management ◽  
Reference Value ◽  
Weighted Averaging ◽  
Illustrative Case ◽  
Content Type ◽  
Fuzzy Environment ◽  
Novel Approach ◽  
Interval Valued ◽  
Multimoora Method ◽  
Interval Value

PurposeThe application of the traditional failure mode and effects analysis (FMEA) technique has been widely questioned in evaluation information, risk factor weights and robustness of results. This paper develops a novel FMEA framework with extended MULTIMOORA method under interval-valued Pythagorean fuzzy environment to solve these problems.Design/methodology/approachThis paper introduces innovatively interval-value Pythagorean fuzzy weighted averaging (IVPFWA) operator, Tchebycheff metric distance and interval-value Pythagorean fuzzy weighted geometric (IVPFWG) operator into the MULTIMOORA submethods to obtain the risk ranking order for emergencies. Finally, an illustrative case is provided to demonstrate the practicality and feasibility of the novel fuzzy FMEA framework.FindingsThe feasibility and validity of the proposed method are verified by comparing with the existing methods. The calculation results indicate that the proposed method is more consistent with the actual situation of project and has more reference value.Practical implicationsThe research results can provide supporting information for risk management decisions and offer decision-making basis for formulation of the follow-up emergency control and disposal scheme, which has certain guiding significance for the practical popularization and application of risk management strategies in the infrastructure projects.Originality/valueA novel approach using FMEA with extended MULTIMOORA method is developed under IVPF environment, which considers weights of risk factors and experts. The method proposed has significantly improved the integrity of information in expert evaluation and the robustness of results.

Determinants of ERM implementation: the case of Tunisian companies

2018 ◽  
Vol 16 (3) ◽  
pp. 443-463
Author(s):  
Sana Masmoudi Mardessi ◽  
Sonda Daoud Ben Arab
Keyword(s):  
Risk Management ◽  
Empirical Evidence ◽  
Firm Size ◽  
Early Stage ◽  
Integrated Approach ◽  
Annual Reports ◽  
Internal Auditor ◽  
Content Type ◽  
Internal Auditors ◽  
Enterprise Risk

Purpose Enterprise risk management (ERM) has become an important subject of increasing interest among companies throughout the world. It is gaining global attention among risk management professionals and academics. However, little is known about the extent of ERM implementation in the Tunisian context. More importantly, there are limited studies in literature that examine the determinants of this implementation. The purpose of this study is threefold, to propose an index to measure the level of ERM implementation, to examine the level of ERM implementation in Tunisian companies and to propose a conceptual framework for the determinants of this implementation. From the review of literature, several factors are found to be determinants of ERM implementation. Such factors are the presence of a Chief Risk Officer, the appointment of an internal auditor, the type of industry and the firm size. Design/methodology/approach To further understand the relation between ERM implementation and its determinants, a questionnaire survey was conducted in 2016 and administrated to 80 companies. Respondents were CRO and more often internal auditors or financial directors. Other data were collected from annual reports and notes to the financial statements. Along with this, the ordinal regression was applied to test the dependence between ERM implementation and its determinants. Findings Based on the data gathered, Tunisian companies have shown an increasing interest in risk management in the post-revolution context; however, an integrated approach of ERM implementation is still at an early stage. Descriptive statistics suggest that ERM is essentially developed in financial institutions, especially in banks and some large companies operating in non- financial industries. With regard to the multivariate regression results, the level of ERM implementation is positively related to the presence of a Chief Risk Officer, internal auditor, the type of industry and the firm size. Originality/value This study attempts to contribute to the risk management literature in two ways. Conceptually, this study proposes an ERM index to assess the level of ERM implementation. Empirically, it provides some empirical evidence that highlights factors which determine the level of ERM implementation. Therefore, this study will extend the scope of literature by providing novel empirical evidence by exploring the Tunisian context.

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