Journal articles: 'Risk-shifting'

1

Sonnenberg, Amnon, and Gennadiy Bakis. "Risk Shifting in Gastroenterology." Gastro Hep Advances 1, no. 4 (2022): 517–19. http://dx.doi.org/10.1016/j.gastha.2022.02.019.

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최시열, 안성필, and Gwangheon Hong. "Risk Shifting and Asset Volatility." KOREAN JOURNAL OF FINANCIAL MANAGEMENT 32, no. 4 (December 2015): 177–202. http://dx.doi.org/10.22510/kjofm.2015.32.4.007.

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STAHL, DULCELINA A. "Risk Shifting in Subacute Care." Nursing Management (Springhouse) 27, no. 7 (July 1996): 20???23. http://dx.doi.org/10.1097/00006247-199607000-00004.

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Eisdorfer, Assaf. "Risk-shifting and investment asymmetry." Finance Research Letters 7, no. 4 (December 2010): 232–37. http://dx.doi.org/10.1016/j.frl.2010.05.005.

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Li, Keming, Jimmy Lockwood, and Hong Miao. "Risk-shifting, equity risk, and the distress puzzle." Journal of Corporate Finance 44 (June 2017): 275–88. http://dx.doi.org/10.1016/j.jcorpfin.2017.04.003.

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Çizakça, Murat. "Risk sharing and risk shifting: An historical perspective." Borsa Istanbul Review 14, no. 4 (December 2014): 191–95. http://dx.doi.org/10.1016/j.bir.2014.06.001.

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Chan, Su Han, Fang Fang, and Jing Yang. "Presales, Leverage Decisions, and Risk Shifting." Journal of Real Estate Research 36, no. 4 (January 1, 2014): 475–510. http://dx.doi.org/10.1080/10835547.2014.12091399.

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Dunham, Lee M. "Risk Shifting and Mutual Fund Performance." CFA Digest 42, no. 1 (February 2012): 93–95. http://dx.doi.org/10.2469/dig.v42.n1.8.

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Danielova, Anna N., Sudipto Sarkar, and Gwangheon Hong. "Empirical Evidence on Corporate Risk-Shifting." Financial Review 48, no. 3 (July 4, 2013): 443–60. http://dx.doi.org/10.1111/fire.12010.

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Indyk, Debbie, and Sarit A. Golub. "The Shifting Locus of Risk-Reduction." Social Work in Health Care 42, no. 3-4 (June 19, 2006): 112–32. http://dx.doi.org/10.1300/j010v42n03_08.

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Teshima, Nobuyuki. "Management Ownership and Risk-Shifting Investment." Japanese Accounting Review 2, no. 2012 (2012): 75–85. http://dx.doi.org/10.11640/tjar.2.2012_75.

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Kane, Edward J. "Making bank risk shifting more transparent." Pacific-Basin Finance Journal 5, no. 2 (June 1997): 143–56. http://dx.doi.org/10.1016/s0927-538x(97)00004-8.

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Chod, Jiri. "Inventory, Risk Shifting, and Trade Credit." Management Science 63, no. 10 (September 2017): 3207–25. http://dx.doi.org/10.1287/mnsc.2016.2515.

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Huang, Jennifer, Clemens Sialm, and Hanjiang Zhang. "Risk Shifting and Mutual Fund Performance." Review of Financial Studies 24, no. 8 (March 1, 2011): 2575–616. http://dx.doi.org/10.1093/rfs/hhr001.

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Eisdorfer, Assaf. "CONVERTIBLE DEBT AND RISK-SHIFTING INCENTIVES." Journal of Financial Research 32, no. 4 (December 2009): 423–47. http://dx.doi.org/10.1111/j.1475-6803.2009.01256.x.

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Elliott, Matthew, Co-Pierre Georg, and Jonathon Hazell. "Systemic risk shifting in financial networks." Journal of Economic Theory 191 (January 2021): 105157. http://dx.doi.org/10.1016/j.jet.2020.105157.

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Campello, Murillo, and Rafael Matta. "Credit default swaps and risk-shifting." Economics Letters 117, no. 3 (December 2012): 639–41. http://dx.doi.org/10.1016/j.econlet.2012.08.013.

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Clark, Brian, and Alireza Ebrahim. "Risk shifting and regulatory arbitrage: Evidence from operational risk." Journal of Financial Stability 58 (February 2022): 100965. http://dx.doi.org/10.1016/j.jfs.2021.100965.

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Atay, Iclal, and Paul Komosinsky. "Inherently safer technology implementation- risk reduction and risk shifting." Process Safety Progress 32, no. 1 (November 28, 2012): 12–16. http://dx.doi.org/10.1002/prs.11547.

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Hamzah, Siti Raihana, Norizarina Ishak, and Ahmad Fadly Nurullah Rasedee. "Risk shifting elimination and risk sharing exposure in equity-based financing – a theoretical exposition." Managerial Finance 44, no. 10 (October 8, 2018): 1210–26. http://dx.doi.org/10.1108/mf-05-2017-0187.

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Purpose The purpose of this paper is to examine incentives for risk shifting in debt- and equity-based contracts based on the critiques of the similarities between sukuk and bonds. Design/methodology/approach This paper uses a theoretical and mathematical model to investigate whether incentives for risk taking exist in: debt contracts; and equity contracts. Findings Based on this theoretical model, it argues that risk shifting behaviour exists in debt contracts only because debt naturally gives rise to risk shifting behaviour when the transaction takes place. In contrast, equity contracts, by their very nature, involve sharing transactional risk and returns and are thus thought to make risk shifting behaviour undesirable. Nonetheless, previous researchers have found that equity-based financing also might carry risk shifting incentives. Even so, this paper argues that the amount of capital provided and the underlying assets must be considered, especially in the event of default. Through mathematical modelling, this element of equity financing can make risk shifting unattractive, thus making equity financing more distinct than debt financing. Research limitations/implications Global awareness of the dangers of debt should be increased as a means of reducing the amount of debt outstanding globally. Although some regulators suggest that sukuk replaces debt, they must also be aware that imitative sukuk poses the same threat to efforts to avoid debt. In short, efforts to ensure future financial stability cannot address only debts or bonds but must also address those types of sukuk that mirrors bonds in their operation. In the wake of the global financial crisis, amid the frantic search for ways of protecting against future financial shocks, this analysis aims to help create future stability by encouraging market players to avoid debt-based activities and promoting equity-based instruments. Practical implications This paper’s findings are relevant for countries that feature more than one type of financial market (e.g. Islamic and conventional) because risk shifting behaviour can degrade economic and financial stability. Originality/value This paper differs from the previous literature in two important ways, viewing risk shifting behaviour not only in relation to debt or bonds but also when set against debt-based sukuk, which has been subjected to similar criticism. Indeed, to the extent that debts and bonds encourage risk shifting behaviour and threaten the entire financial system, so, too, can imitation sukuk or debt-based sukuk. Second, this paper is unique in exploring the ability of equity features to curb equityholders’ incentive to engage in risk shifting behaviour. Such an examination is necessary for the wake of the global financial crisis, for researchers and economists now agree that risk shifting must be controlled.

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Wijaya, I. Nyoman Agus, Enny Prayogo, Rini Handayani, and Ivan Prihartono. "Corporate Risk, Cost Shifting, and Tax Avoidance." Jurnal Akuntansi 13, no. 2 (November 3, 2021): 200–213. http://dx.doi.org/10.28932/jam.v13i2.3553.

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Abstract This study aims to investigate relationship between corporate risk, cost shifting, and tax avoidance. Using 50 companies of all manufacturing companies listed in Indonesian Stock Exchange, we try to investigate a corporate risk, cost shifting and tax avoidance in annual report audited over long time periods (5 years) sequentially. Then, we test the relationship between corporate risk and cost shifting to tax avoidance that reduced the firm’s income tax payments. This study provides evidence that companies with high risk are more likely to do tax avoidance and companies that have a good strategy in allocating their costs are driven by the behavior of minimazing tax payments. We also find that the higher of corporate risk will increase corporate tax payment to Internal Revenue Services. Keywords: Corporate Risk, Cost Shifting, and Tax Avoidance

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22

Ozerturk, Saltuk. "Risk sharing, risk shifting and the role of convertible debt." Journal of Mathematical Economics 44, no. 11 (December 2008): 1257–65. http://dx.doi.org/10.1016/j.jmateco.2008.04.001.

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Popescu, Marius, and Zhaojin Xu. "Market states and mutual fund risk shifting." Managerial Finance 43, no. 7 (July 10, 2017): 828–38. http://dx.doi.org/10.1108/mf-09-2016-0278.

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Purpose The purpose of this paper is to explore the motivation behind mutual funds’ risk shifting behavior by examining its impact on fund performance, while jointly considering fund managers’ compensation incentives and career concerns. Design/methodology/approach The study uses a sample of US actively managed equity funds over the period 1980-2010. A fund’s risk shifting is estimated as the difference between the fund’s intended portfolio risk in the second half of the year and the realized portfolio risk in the first half of the year. Using the state of the market to identify the dominating type of incentive that fund managers face, we examine the relationship between performance and risk shifting in a cross-sectional regression setting, using the Fama and MacBeth (1973) methodology. Findings The authors find that poorly performing (well performing) funds are likely to increase (decrease) their risk level in bull markets, while reducing (increasing) it during bear markets. Furthermore, we find that funds that increase risk underperform, while those that decrease their portfolio risk do not. In addition, we find that poorly performing funds that increase (or decrease) their risk underperform across bull and bear markets, while well performing funds that reduce risk during bull markets subsequently outperform. Originality/value The paper contributes to the literature on mutual fund risk shifting by providing evidence that the performance consequence of such behavior is dependent on the state of the market and on the funds’ past performance. The results suggest that loser funds tend to be agency prone or be managed by managers with inferior investment skill, and that winner funds exhibit superior investment ability during bull markets. The authors argue that both the agency and investment ability hypotheses are driving fund managers’ risk shifting behavior.

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Andreu, Laura, José Luis Sarto, and Miguel Serrano. "Risk shifting consequences depending on manager characteristics." International Review of Economics & Finance 62 (July 2019): 131–52. http://dx.doi.org/10.1016/j.iref.2019.03.009.

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Kanas, Angelos, and Panagiotis D. Zervopoulos. "Systemic risk-shifting in U.S. commercial banking." Review of Quantitative Finance and Accounting 54, no. 2 (March 7, 2019): 517–39. http://dx.doi.org/10.1007/s11156-019-00797-5.

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Ogden, Lesley Evans. "Biocontrol 2.0: A Shifting -Risk–Benefit Balance." BioScience 70, no. 1 (December 6, 2019): 17–22. http://dx.doi.org/10.1093/biosci/biz135.

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27

Gardner, Laura B., and Richard M. Scheffler. "Privatization in Health Care: Shifting the Risk." Medical Care Review 45, no. 2 (August 1988): 215–53. http://dx.doi.org/10.1177/107755878804500203.

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Boyd, John H., and Hendrik Hakenes. "Looting and risk shifting in banking crises." Journal of Economic Theory 149 (January 2014): 43–64. http://dx.doi.org/10.1016/j.jet.2012.10.001.

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29

Grossman, Herschel I., and John B. Van Huyck. "Nominal sovereign debt, risk shifting, and reputation." Journal of Economics and Business 45, no. 3-4 (August 1993): 341–52. http://dx.doi.org/10.1016/0148-6195(93)90022-g.

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30

Hendi, Hendi, and David Cantona. "Determinan Penghindaran Pajak: Perspektif Teori Risk-Shifting." InFestasi 18, no. 2 (December 27, 2022): Inpress. http://dx.doi.org/10.21107/infestasi.v18i2.15128.

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31

Rivera, Alejandro. "Dynamic Moral Hazard and Risk-Shifting Incentives in a Leveraged Firm." Journal of Financial and Quantitative Analysis 55, no. 4 (October 16, 2019): 1333–67. http://dx.doi.org/10.1017/s0022109019000826.

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I develop an analytically tractable model that integrates the risk-shifting problem between bondholders and shareholders with the moral-hazard problem between shareholders and the manager. An optimal contract binds shareholders and the manager, and this contract’s flexibility allows shareholders to relax the manager’s incentive constraint following a “good” profitability shock. Thus, the optimal contract amplifies the upside and thereby increases shareholder appetite for risk shifting. Whereas some empirical studies find a positive relation between risk shifting and leverage, others find a negative relation. This model predicts a non-monotonic relation between risk shifting and leverage and can reconcile these contradictory empirical findings.

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32

Khandelwal, Sunil, and Khaled Aljifri. "Risk sharing vs risk shifting: a comparative study of Islamic banks." Journal of Islamic Accounting and Business Research 12, no. 8 (October 13, 2021): 1105–23. http://dx.doi.org/10.1108/jiabr-08-2018-0121.

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Purpose This study aims to compare the use of risk-sharing and risk-shifting contracts (RSFCs) in Islamic banks using a triple grouping of conservative, moderate and liberal Islamic banks based on the Khaled Khandelwal (KK) model. Six fundamental Islamic contracts are used in this study, namely, Mushãrakah, Mudãrabah, Murãbaha, Salam, Ijãrah, Istisnã. Mushãrakah and Mudãrabah represent profit and loss sharing contracts (i.e., risk-sharing contracts – RSHCs), whereas Murãbaha, Salam, Ijãrah and Istisnã represent RSFCs. This study extends the previous studies by addressing an issue that has been neglected in the literature. The extent to which the two groups of contracts are used is extremely important because of its effect on the valuation of Islamic banks and on their earning quality. Design/methodology/approach This study aims to analyze, using descriptive statistics and inferential statistics, the use of RSHCs and RSFCs made by 72 fully Islamic banks, using a sample that includes banks in most of the countries where Islamic banks are present. Only fully Islamic Banks were considered, that is, banks that are essentially mainstream banks; therefore, banks that include only a specific line of Islamic products, often called the Islamic Window, were excluded. The total number of the sample was 118, but the study was restricted to 72 banks due to the availability of time series data covering the period of study, 2007 to 2015. Findings The study documents that over the period 2007 to 2015 the moderate banks have better distribution and balance of RSHCs and RSFCs than the conservative and liberal banks. The conservative banks are found to depend greatly on RSFCs, whereas the liberal banks are found to depend almost completely on RSFCs. Unexpectedly, the conservative banks have not shown a noticeable improvement over the period of analysis on their level of reliance on RSHCs. The results show that there is a significant difference in the percentage income distribution of the two contracts between the moderate banks and the conservative banks and between the moderate banks and the liberal banks. However, no significant difference was found between the conservative banks and the liberal banks. Originality/value The study uses an alternate rating model for Islamic financial institutions. The study examined the issue of risk sharing and risk shifting contracts usage in banks for a long period of nine years and at a global level and with an additional dimension of three categories of Islamic Banks based on the KK model.

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Kitamura, Tomoki, and Kozo Omori. "Optimal risk-taking in corporate defined benefit plans under risk-shifting." Managerial Finance 45, no. 8 (August 12, 2019): 1076–91. http://dx.doi.org/10.1108/mf-01-2019-0016.

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Purpose The purpose of this paper is to theoretically examine the risk-taking decision of corporate defined benefits (DB) plans. The equity holders’ investment problem that is represented by the position of a vulnerable option is solved. Design/methodology/approach The simple traditional contingent claim approach is applied, which considers only the distributions of corporate cash flow, without the model expansions, such as market imperfections, needed to explain the firms’ behavior for DB plans in previous studies. Findings The authors find that the optimal solution to the equity holders’ DB investment problem is not an extreme corner solution such as 100 percent investment in equity funds as in the literature. Rather, the solution lies in the middle range, as is commonly observed in real-world economies. Originality/value The major value of this study is that it develops a clear mechanism for obtaining an internal solution for the equity holders’ DB investment problem and it provides the understanding that the base for corporate investment behavior for DB plans should incorporate the fact that in some cases the optimal solution is in the middle range. Therefore, the corporate risk-taking behavior of DB plans is harder to identify than the results of the empirical literature have predicted.

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Prasch, Robert E. "Shifting Risk: The Divorce of Risk from Reward in American Capitalism." Journal of Economic Issues 38, no. 2 (June 2004): 405–12. http://dx.doi.org/10.1080/00213624.2004.11506700.

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Rauh, Joshua D. "Risk Shifting versus Risk Management: Investment Policy in Corporate Pension Plans." Review of Financial Studies 22, no. 7 (June 21, 2008): 2687–733. http://dx.doi.org/10.1093/rfs/hhn068.

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McKee, Eric. "Risk-shifting: Evidence from the 2007 credit crisis." North American Journal of Economics and Finance 62 (November 2022): 101762. http://dx.doi.org/10.1016/j.najef.2022.101762.

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Goto, Shingo, and Noriyoshi Yanase. "Pension return assumptions and shareholder-employee risk-shifting." Journal of Corporate Finance 70 (October 2021): 102047. http://dx.doi.org/10.1016/j.jcorpfin.2021.102047.

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Myers, Nicole M. "Shifting Risk: Bail and the Use of Sureties." Current Issues in Criminal Justice 21, no. 1 (July 2009): 127–47. http://dx.doi.org/10.1080/10345329.2009.12035836.

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Ravichandran, R., and J. Michael Pinegar. "Risk Shifting in International Licensing Agreements: A Note." Journal of International Financial Management & Accounting 2, no. 2-3 (June 1990): 181–95. http://dx.doi.org/10.1111/j.1467-646x.1990.tb00086.x.

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Sappideen, C. "The Electricity Supply Industry: Shifting Risk by Outsourcing." Australian Journal of Electrical and Electronics Engineering 6, no. 1 (January 2009): 81–92. http://dx.doi.org/10.1080/1448837x.2009.11464228.

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Krapl, Alain A., and Reilly S. White. "Executive pensions, risk-shifting, and foreign exchange exposure." Research in International Business and Finance 38 (September 2016): 376–92. http://dx.doi.org/10.1016/j.ribaf.2016.05.001.

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42

Gelter, Martin. "Risk-shifting Through Issuer Liability and Corporate Monitoring." European Business Organization Law Review 14, no. 4 (December 2013): 497–533. http://dx.doi.org/10.1017/s1566752912001280.

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43

Deedwania, Prakash C., and Vivian A. Fonseca. "Diabetes, prediabetes, and cardiovascular risk: Shifting the paradigm." American Journal of Medicine 118, no. 9 (September 2005): 939–47. http://dx.doi.org/10.1016/j.amjmed.2005.05.018.

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44

Gropp, Reint, Hendrik Hakenes, and Isabel Schnabel. "Competition, Risk-shifting, and Public Bail-out Policies." Review of Financial Studies 24, no. 6 (November 26, 2010): 2084–120. http://dx.doi.org/10.1093/rfs/hhq114.

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45

Gilje, Erik P. "Do Firms Engage in Risk-Shifting? Empirical Evidence." Review of Financial Studies 29, no. 11 (August 13, 2016): 2925–54. http://dx.doi.org/10.1093/rfs/hhw059.

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46

Harikumar, T. "LEVERAGE, RISK-SHIFTING INCENTIVE, AND STOCK-BASED COMPENSATION." Journal of Financial Research 19, no. 3 (September 1996): 417–28. http://dx.doi.org/10.1111/j.1475-6803.1996.tb00222.x.

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47

Lee, Seok-Weon. "FDICIA and Risk Shifting 1n the Banking Industry." International Studies Review 7, no. 1 (October 8, 2006): 87–116. http://dx.doi.org/10.1163/2667078x-00701005.

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This is an empirical study that examines how the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991 in the U.S. banking industry affects the moral hazard risk-taking incentives of banks. We find that FDICIA appears to be effective in significantly reducing the systematic risk-taking incentives of the banks. Considering that the banks' asset portfolios are necessarily largely systematic risk-related, the significant decrease in their systematic risk-taking incentives provides some evidence of the effectiveness of FDICIA. However, with respect to the nonsystematic risk-taking behavior, the results generally indicate statistically insignificant decreases in the risk-taking incentives after FDICIA. To well-diversified investors who can diversify nonsystematic risk away, nonsystematic risk may not be a risk any more. However, to maintain a sound banking environment and to reduce the risk to individual banks, this result implies that regulatory agents should monitor the banks’ nonsystematic risk-taking behavior more closely, as long as it is positively related to the banks’ failures. We further test the change in the risk-taking incentives by partitioning the full sample into two groups: Banks with higher moral hazard incentives as those with larger asset size and lower capital ratio and banks with lower moral hazard incentives as those with smaller asset size and higher capital ratio. The main result for this test is that, with FDICIA, the decrease in the risk-taking incentives of the banks with higher moral hazard incentives (larger asset-size and lower capital-ratio banks) is less than that of the banks with lower moral hazard incentives (smaller asset-size and higher capital-ratio banks), with respect to both systematic and nonsystematic risk-taking measures. Furthermore, the change in the nonsystematic risk-taking incentives of the banks with higher moral hazard incentives is rather mixed, while their systematic incentives are decreased. These findings imply that the regulatory agents should allocate more time and effort toward monitoring the banks with higher moral hazard incentives with particular emphasis on their nonsystematic risk-taking behavior.

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48

Mahler, H. C. "An example of credibility and shifting risk parameters." Insurance: Mathematics and Economics 12, no. 1 (February 1993): 71. http://dx.doi.org/10.1016/0167-6687(93)91019-q.

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Allen, Franklin, Gadi Barlevy, and Douglas Gale. "Asset Price Booms and Macroeconomic Policy: A Risk-Shifting Approach." American Economic Journal: Macroeconomics 14, no. 2 (April 1, 2022): 243–80. http://dx.doi.org/10.1257/mac.20200041.

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This paper uses a risk-shifting model to analyze policy responses to asset price booms. We show risk shifting leads to inefficient asset and credit booms in which asset prices can exceed fundamentals. However, the inefficiencies associated with risk shifting arise independently of whether the asset is a bubble. Given evidence of risk shifting, policymakers may not need to determine if assets are bubbles to justify intervention. We then show that some of the main candidate interventions against asset booms have ambiguous welfare implications: tighter monetary policy can mitigate some inefficiencies but at a cost, while leverage restrictions may raise asset prices and lead to more leveraged speculation rather than less. Policy responses are more effective when they disproportionately discourage riskier investments. (JEL D82, E23, E32, E44, E52, G01, G12)

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François, Pascal, Georges Hübner, and Nicolas Papageorgiou. "Strategic Analysis of Risk-Shifting Incentives with Convertible Debt." Quarterly Journal of Finance 01, no. 02 (June 2011): 293–321. http://dx.doi.org/10.1142/s2010139211000079.

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Convertible debt eliminates asset substitution in a one-period setting (Green, 1984). But convertible debt terms are usually set before the asset substitution opportunity. This allows shareholders and convertible debtholders to play a strategic noncooperative game. Two risk-shifting Nash equilibria are attainable: pure asset substitution when, despite no conversion, shareholders benefit from shifting risk, and strategic conversion when, despite early conversion, convertible debtholders expropriate wealth from straight debtholders. Even when initial convertible debt is designed to minimize the risk-shifting likelihood, the risk of asset substitution remains economically substantial — contrasting with the agency theoretic rationale for issuing convertible debt.

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Journal articles on the topic 'Risk-shifting'

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