Insolvency Risk and Value Maximization: A Convergence between Financial Management and Risk Management

This conceptual paper focuses on the relationship between insolvency, capital structure, and value creation. The aim is twofold: to define risk-based measures able absorb effects of financial distress avoid corporate default; verify conditions limits use these in policies. based insolvency risk will be defined by recalling concepts Cash Flow-at-Risk Capital-at-Risk. A first check usefulness their consistency with principle maximization carried out through a simulation model. scenario analysis allows us examine how policies oriented avoidance affect firm value. According evidence from model, appear useful lowering default risk, but they require continuous assessment impact