Operational Risk, Financial Distress Risk and Equity Returns

2011 ◽  
Author(s):  
Ramya Rajajagadeesan Aroul ◽  
Mishuk Chowdhury ◽  
Peggy E. Swanson
Keyword(s):  
Financial Distress ◽  
Operational Risk ◽  
Equity Returns ◽  
Distress Risk

Financial Distress Risk and Stock Price Crashes

2019 ◽  
Author(s):  
Christoforos Andreou ◽  
Panayiotis C. Andreou ◽  
Neophytos Lambertides
Keyword(s):  
Financial Distress ◽  
Stock Price ◽  
Distress Risk

Are Firms with Negative Book Equity in Financial Distress?

2015 ◽  
Vol 18 (03) ◽  
pp. 1550016 ◽  
Author(s):  
Tze Chuan Chewie ANG
Keyword(s):  
Failure Rate ◽  
Financial Distress ◽  
Operating Performance ◽  
Large Magnitude ◽  
Small Magnitude ◽  
First Report ◽  
Distress Risk ◽  
Financial Characteristics ◽  
And Control ◽  
Negative Earnings

This study examines whether negative book equity (BE) firms are in financial distress by analyzing their operating performance, financial characteristics, distress risk, and survivability when they first report negative BE. Firms with small magnitude of negative BE (SNBE firms) suffer from persistent negative earnings and financial distress, while firms with large magnitude of negative BE (LNBE firms) experience a temporary non-distress related earnings shock. LNBE firms report consecutive years of negative BE, but have lower distress risk and failure rate than both SNBE and control firms. However, all negative BE stocks have abysmal returns subsequent to their first report of negative BE.

scholarly journals Does corporate social responsibility reduce financial distress risk?

2020 ◽  
Vol 91 ◽  
pp. 835-851 ◽  
Author(s):  
Sabri Boubaker ◽  
Alexis Cellier ◽  
Riadh Manita ◽  
Asif Saeed
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Distress ◽  
Distress Risk ◽  
Corporate Social

scholarly journals Implications Of The Risk-Based Capital Requirements Of Implicit Recourse In Asset Securitizations In The Banking Industry

2011 ◽  
Vol 2 (12) ◽  
Author(s):  
Stephen A. Kane ◽  
Mark L. Muzere
Keyword(s):  
Financial Distress ◽  
Balance Sheet ◽  
Warning Signal ◽  
Capital Requirements ◽  
Equity Returns ◽  
Font Size ◽  
Yield Spreads ◽  
Definition Of ◽  
Regional Banks ◽  
Implicit Recourse

<p class="MsoBodyText2" style="text-align: justify; line-height: normal; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt; mso-bidi-font-style: italic; mso-bidi-font-size: 12.0pt;"><span style="font-family: Times New Roman;">We consider implications of the risk-based capital requirements of implicit recourse in asset securitizations. These implications include issues in finance such as risk management and contracting between counterparties. The first part of our analysis deals with asset securitizations where originating institutions provide investors with implicit recourse. We show that the risk-based capital requirements associated with the new regulatory definition of implicit recourse may discourage some banks from offering implicit recourse in their asset securitizations. This suggests that the new regulatory definition of implicit recourse may be a workable compromise between supervisory regulators and originating institutions. We then consider a scenario where banks enter into reinsurance contracting with banks in other regions to mitigate some regional economic risks. These reinsurance contracts may enable banks to improve the performance of their balance sheet assets. Although we find weak correlation among equity returns for regional banks, future high correlation among bank portfolios could pose a problem to regulators because when a bank gets into financial distress this may spill over to other network banks. Widening yield spreads in asset securitizations might serve as an early warning signal of financial distress. Thus, regulators might devote more supervisory resources on originating institutions when their asset securitization yield spreads widen.</span></span></p>

scholarly journals Distress risk and leverage puzzles: Evidence from Taiwan

2016 ◽  
Vol 6 (2) ◽  
pp. 72-78
Author(s):  
Kung-Cheng Ho ◽  
Shih-Cheng Lee ◽  
Po-Hsiang Huang ◽  
Ting-Yu Hsu
Keyword(s):  
Asset Pricing ◽  
Stock Returns ◽  
Cross Section ◽  
Financial Distress ◽  
Distress Risk ◽  
The Cross

Financial distress has been invoked in the asset pricing literature to explain the anomalous patterns in the cross-section of stock returns. The risk of financial distress can be measured using indexes. George and Hwang (2010) suggest that leverage can explain the distress risk puzzle and that firms with high costs choose low leverage to reduce distress intensities and earn high returns. This study investigates whether this relationship exists in the Taiwan market. When examined separately, distress intensity is found to be negatively related to stock returns, but leverage is found to not be significantly related to stock returns. The results are the same when distress intensity and leverage are examined simultaneously. After assessing the robustness by using O-scores, distress risk puzzle is found to exist in the Taiwan market, but the leverage puzzle is not.

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