TY - JOUR TI - Information conveyed in hiring announcements of senior executives overseeing enterprise-wide risk management processes AU - Beasley, M. AU - Pagach, D. AU - Warr, R. T2 - Journal of Accounting, Auditing and Finance AB - Enterprise risk management (ERM) is the process of analyzing the portfolio of risks facing the enterprise to ensure that the combined effect of such risks is within an acceptable tolerance. While more firms are adopting ERM, little academic research exists about the costs and benefits of ERM. Proponents of ERM claim that ERM is designed to enhance shareholder value; however, portfolio theory suggests that costly ERM implementation would be unwelcome by shareholders who can use less costly diversification to eliminate idiosyncratic risk. This study examines equity market reactions to announcements of appointments of senior executive officers overseeing the enterprise's risk management processes. Based on a sample of 120 announcements from 1992-2003, we find that the univariate average two-day market response is not significant, suggesting that a general definitive statement about the benefit or cost of implementing ERM is not possible. However, our multiple regression analysis reveals that there are significant relations between the magnitude of equity market returns and certain firm specific characteristics. For nonfinancial firms, announcement period returns are positively associated with firm size and the volatility of prior periods' reported earnings and negatively associated with leverage and the extent of cash on hand relative to liabilities. For financial firms, however, there are fewer statistical associations between announcement returns and firm characteristics. These results suggest that the costs and benefits of ERM are firm-specific. DA - 2008/// PY - 2008/// DO - 10.1177/0148558X0802300303 VL - 23 IS - 3 SP - 311-332 UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-47949130977&partnerID=MN8TOARS ER - TY - JOUR TI - Market timing and the debt-equity choice AU - Elliott, William B. AU - Koeter-Kant, Johanna AU - Warr, Richard S. T2 - JOURNAL OF FINANCIAL INTERMEDIATION AB - We test the market timing theory of capital structure using an earnings-based valuation model that allows us to separate equity mispricing from growth options and time-varying adverse selection; thus avoiding the multiple interpretations of book-to-market ratio. We find that equity market mispricing plays a significant, if not dominant, role in the security choice decision. Our results are robust to the inclusion of proxies for time-varying growth options and alternate methods of measuring misvaluation. DA - 2008/4// PY - 2008/4// DO - 10.1016/j.jfi.2007.05.002 VL - 17 IS - 2 SP - 175-197 SN - 1042-9573 UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-41349108018&partnerID=MN8TOARS KW - capital structure KW - market timings KW - security choicer KW - mispricing KW - earnings-based valuation KW - residual income model ER -