Risk Management in firms & company and Industries

Backed by industrial organization theory, it is believed that firms with high individual market shares and firms operating in industries where output is concentrated to a few sellers and entry barriers are high can to some extent insulate their operations from general market risk. This article explores the effect of disclosure on risk management policies. Following recent theory on risk management, with market imperfections, risk management creates value by reducing the volatility of the cash flows. Those risk policies are conditioned by actual disclosure rules that reduce information asymmetry between managers and shareholders, providing a comprehensive view of the firm. However, disclosure gives different accounting choices, hence affecting the decision making process of managers. The purpose of this article is to establish if managers adapt their actual risk policy to disclosure rules

Risk management, Capital markets, Evidence on Risk Taking