Firm transparency and idiosyncratic risk

“ Idiosyncratic Risk , Systematic Risk , and Firm Welfare ”

We study the motivation of an entrepreneur to provide disclosure that works primarily to reduce investors’assessment of the firm’s idiosyncratic risk. We refer to this disclosure as “idiosyncratic disclosure.”We assume that the firm’s cash flows are determined by both idiosyncratic and systematic events. The model shows that when the entrepreneur faces a capital market where competition to acqu...

Innovation and Idiosyncratic Risk: an Industry and Firm Level Analysis

Recent studies find that idiosyncratic risk (IR), the degree to which firm specific returns are more volatile than aggregate market returns, has increased since the 1960’s and attribute this to economy wide factors such as the role of the IT revolution. To gain further insights into why IR has increased over time, our paper uses industry level data and firm level data to study if firms and indu...

Innovation and Idiosyncratic Risk: an Industry & Firm Level Analysis

Recent studies find that idiosyncratic risk (IR) has increased since the 1960’s and attribute this to economy wide factors such as the role of the IT revolution. To gain further insights into why IR has increased over time, our paper uses industry level data and firm level data to study if industries considered “very innovative” and R&D intensive firms are characterized by higher IR due to how ...

Tax Avoidance , Corporate Transparency , and Firm Value

The Debate over Doing Good: Corporate Social Performance, Strategic Marketing Levers, and Firm-Idiosyncratic Risk

Marketers and investors face a heated, provocative debate over whether excelling in social responsibility initiatives hurts or benefits firms financially. This study develops a theoretical framework that predicts (1) the impact of corporate social performance (CSP) on firm-idiosyncratic risk and (2) the role of two strategic marketing levers, advertising and research and development (R&D), in e...