Download PDF by Gregor Gossy, Univ.-Prof. Dr. Paul Wentges: A Stakeholder Rationale for Risk Management: Implications

By Gregor Gossy, Univ.-Prof. Dr. Paul Wentges

ISBN-10: 3834909858

ISBN-13: 9783834909855

Generally, basically the pursuits of shareholders, debtholders, and company administration are taken under consideration while studying company monetary judgements whereas the pursuits of non-financial stakeholders are usually ignored. Gregor Gossy develops a so-called stakeholder intent for hazard administration arguing that organizations that are extra depending on implicit claims from their non-financial stakeholders, similar to shoppers, providers, and staff, favor conservative monetary rules. to be able to practice panel info analyses of the determinants of company monetary judgements, the writer makes use of facts from Austrian and German business businesses.

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Hence, the firm's profit-maximizing objective leads to a market equilibrium in which each firm yields zero economic returns (Connor, 1991: 123). Speaking with Lockett and Thompson (2001), the neoclassical theory of the firm turns out to be a misnomer for a theory of the short-run behavior of markets (Locket and Thompson, 2001: 727). The RBV sticks to the neoclassical view of the firm as a combiner of input factors. However, it does not rely on the neoclassic assumptions of a freely available and perfectly specifiable production function together with costless resource mobility and divisibility of input factors (Connors, 1991: 132).

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. g. in production planning) and their earnings more volatile. In such a case, a risk-averse manager who is compensated on the basis of cash flows might be willing to work for less compensation when cash flow volatility is lower. Then, it is in the interest of shareholders to reduce business risk because lower business risk is associated with higher cash flows (Amit and Wernerfelt, 1990: 522).

Otherwise, positive NPV investment opportunities would not be available to the firm. The origins of such advantages are specialized resources the firm possesses. Although agency theory recognizes the value-creating capacity of specialized resources, financial economics and agency theory in particular do not deal with developing a theory on the sources of competitive advantage. This is the key question of strategic management's theory on the resource-based view of the firm. As will be shown later, both agency theory and the resource-based theory are compatible with each other (Seth and Thomas, 1994: 178–180).

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A Stakeholder Rationale for Risk Management: Implications for Corporate Finance Decisions by Gregor Gossy, Univ.-Prof. Dr. Paul Wentges

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