The impact of the adoption of hedge accounting rules on enterprise risk management adoption practices by multinationals

Abyankyar, P, Klumpes, P ORCID: 0000-0002-3357-6087, Wang, P and Tang, L, 2015. The impact of the adoption of hedge accounting rules on enterprise risk management adoption practices by multinationals. In: Institute of Risk Management ERM Special Interest Group Workshop, London, 12 June 2015.

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Abstract

We predict that adoption of Enterprise Risk Management (ERM) by multinational non-financial firms is inter-related with both firm hedge accounting policies and choices about whether to adopt US GAAP or IFRS('GAAP quality'). We hypothesize that sources of both market risk and idiosyncratic risk mitigate the ability of ERM-adopting firms to produce greater risk reducution. Therefore, we predict that sources of firm specific risk, such as pension risk, and hedge accounting policies, as well as GAAP quality, interact with ERM to affect incentives facing multinational firms to reduce their risk. Consistent with this hypothesis, we find that firms adopting ERM experience a reduction in stock return volatility but only for the period following implementation. Our results also find that income smoothing; GAAP choice and geographical complexity mitigate the effect of ERM adoption on risk and return volatility for ERM-adopting firms.

Item Type: Conference contribution
Alternative Title: ERM Adoption by multinationals
Creators: Abyankyar, P., Klumpes, P., Wang, P. and Tang, L.
Date: June 2015
Divisions: Schools > Nottingham Business School
Depositing User: Linda Sullivan
Date Added: 27 Jun 2016 11:06
Last Modified: 09 Jun 2017 14:03
URI: http://irep.ntu.ac.uk/id/eprint/28022

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