By Gregor Gossy, Univ.-Prof. Dr. Paul Wentges
Regularly, purely the pursuits of shareholders, debtholders, and company administration are taken under consideration whilst studying company monetary judgements whereas the pursuits of non-financial stakeholders are frequently ignored. Gregor Gossy develops a so-called stakeholder motive for danger administration arguing that agencies that are extra depending on implicit claims from their non-financial stakeholders, equivalent to shoppers, providers, and staff, want conservative monetary rules. so as to practice panel information analyses of the determinants of company monetary judgements, the writer makes use of info from Austrian and German business businesses.
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Additional info for A Stakeholder Rationale for Risk Management: Implications for Corporate Finance Decisions
Therefore, firm-specific risks may not be omitted from a strategic management perspective. 34 Although controversially discussed between scholars from finance and strategy, Bettis' (1983) article lays the ground for further contributions from strategy researchers criticizing the CAPM's application in strategy research. , Amit and Wernerfelt (1990) and Chatterjee et al. (1999). Their main points of criticism are outlined below. Amit and Wernerfelt (1990) offer three motives for why managers might indeed engage in reducing business risk.
Examples of such socially complex resources are a firm's reputation among various stakeholders, a firm's culture, or the teamwork among employees (Barney, 1991: 107–111; Barney and Hesterly, 1996: 134). Originally developed to improve understanding about the strategy and (out) performance of the firm, recent pieces of literature show that the RBV is related to the financial policy of the firm. Particularly, resource-driven strategies shape the future financial decisions of the firm and can increase the cost of the firm's financial structure.
The difference between OC and OL is Net Organizational Capital, NOC, which is positive when the implicit claims are sold to the firm's stakeholders at an average price that exceeds the average cost of honoring them (Cornell and Shapiro, 1987: 8). Wentges (2000) argues that the value stakeholders ascribe to their implicit claims with the firm depends on the perceived risk profile of the firm (Wentges, 2000: 204). Stakeholders' risk premia for this perceived risk profile are driven by their individual preferences, their potential to diversify risks, the weight of their implicit claims in their overall portfolio, but primarily the financial and non-financial rewards they expect to receive from the firm in the future (Wentges, 2002: 148).