Universität zu Köln

Altuntas, Muhammed, Berry-Stolzle, Thomas R. and Hoyt, Robert E. (2020). Enterprise Risk Management Adoption and Managerial Incentives. J. Insur. Iss., 43 (2). S. 1 - 43. TALLAHASSEE: WESTERN RISK & INSURANCE ASSOC. ISSN 2332-4244

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Abstract

Enterprise Risk Management (ERM) is the approach of managing all risks faced by a firm in an integrated, holistic fashion. This research analyzes factors that influence a firm's decision to start an ERM program. Our comprehensive survey data of German property-liability insurance companies allows us to construct direct measures of ERM program adoption and ERM quality. We find that negative changes in past firm performance increase a firm's probability to adopt ERM and are accompanied by significant improvements in the quality of a firm's risk management process. Furthermore, these effects are stronger for firms that would be expected to have relatively high forced CEO turnover rates after periods of bad performance, supporting the prediction of the career concerns view and consistent with managerial incentives generally. Skilled managers concerned about keeping their jobs should reduce the volatility of a firm's earnings after a period of poor performance, and ERM adoption can help achieve that goal.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Altuntas, Muhammed UNSPECIFIED UNSPECIFIED UNSPECIFIED Berry-Stolzle, Thomas R. UNSPECIFIED UNSPECIFIED UNSPECIFIED Hoyt, Robert E. UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-321022
Journal or Publication Title:	J. Insur. Iss.
Volume:	43
Number:	2
Page Range:	S. 1 - 43
Date:	2020
Publisher:	WESTERN RISK & INSURANCE ASSOC
Place of Publication:	TALLAHASSEE
ISSN:	2332-4244
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language AGENCY PROBLEMS; CAREER CONCERNS; CEO TURNOVER; HEDGE FUND; OWNERSHIP; PROPERTY; PERFORMANCE; STOCK; DIVERSIFICATION; DETERMINANTS Multiple languages Business, Finance Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/32102