Abstract

http://ssrn.com/abstract=1010200
 
 

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The Characteristics of Firms that Hire Chief Risk Officers


Donald P. Pagach


North Carolina State University

Richard S. Warr


North Carolina State University

April 10, 2010


Abstract:     
Enterprise risk management (ERM) is a management approach that holistically manages risks across the organization. In this paper we examine the characteristics of firms that adopt ERM. Our results support the hypothesis that firms adopt ERM for direct economic benefit rather than to merely comply with regulatory pressure. Using the hiring of a CRO as a proxy for ERM adoption, we find that firms that are larger, have more volatile operating cash flows, and greater institutional ownership are more likely to initiate an ERM program. In addition, when the CEO has incentives to take risk (through compensation), the firm is also more likely to hire a CRO. Finally, banks with lower levels of Tier 1 capital are also more likely to hire a CRO.

Number of Pages in PDF File: 38

Keywords: Enterprise Risk Management

JEL Classification: G20, J33

working papers series


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Date posted: September 4, 2007 ; Last revised: April 16, 2010

Suggested Citation

Pagach, Donald P. and Warr, Richard S., The Characteristics of Firms that Hire Chief Risk Officers (April 10, 2010). Available at SSRN: http://ssrn.com/abstract=1010200 or http://dx.doi.org/10.2139/ssrn.1010200

Contact Information

Donald P. Pagach
North Carolina State University ( email )
Raleigh, NC 27695-8113
United States
919-515-4447 (Phone)
919-515-4446 (Fax)
Richard S. Warr (Contact Author)
North Carolina State University ( email )
Raleigh, NC 27695-8614
United States
919-513-4646 (Phone)
919-515-6943 (Fax)
HOME PAGE: http://www4.ncsu.edu/~rswarr/
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