Chief Risk Officers and Firm Value: Empirical Evidence From the Insurance Industry

40 Pages Posted: 20 Apr 2019

See all articles by Aldy Fernandes da Silva

Aldy Fernandes da Silva

Fundação Escola de Comércio Álvares Penteado (FECAP)

Vinicius Brunassi Silva

Fundação Escola de Comércio Álvares Penteado (FECAP)

Joelson Oliveira Sampaio

Getulio Vargas Foundation (FGV), Sao Paulo School of Economics, Students

Juliano Silva

Fundação Escola de Comércio Álvares Penteado (FECAP)

Date Written: March 18, 2019

Abstract

We study the relationship between enterprise risk management and firm value. We analyze how the influence and reporting of the chief risk officer (CRO) and the incentives to compensate him or her contribute to firm value. We use U.S. publicly traded insurers data between 2009 and 2017 and find that the participation of a CRO is insufficient for value creation in insurers. Our results present a negative relationship between a CRO and firm value. However, we find empirical evidence of a positive relationship between firm value and the incentives related to the compensation of the CRO, specifically including the CRO in the compensation committee of the board and providing the CRO with an equity-based compensation plan.

Keywords: Enterprise risk management; Chief risk officer; Compensation; Firm value; Insurance industry

JEL Classification: G22; G32

Suggested Citation

da Silva, Aldy Fernandes and Brunassi Silva, Vinicius Augusto and Sampaio, Joelson Oliveira and Silva, Juliano Rodrigues, Chief Risk Officers and Firm Value: Empirical Evidence From the Insurance Industry (March 18, 2019). Available at SSRN: https://ssrn.com/abstract=3355854 or http://dx.doi.org/10.2139/ssrn.3355854

Aldy Fernandes Da Silva

Fundação Escola de Comércio Álvares Penteado (FECAP) ( email )

Av. Liberdade, 532
Liberdade
São Paulo
Brazil

Vinicius Augusto Brunassi Silva (Contact Author)

Fundação Escola de Comércio Álvares Penteado (FECAP) ( email )

Av. Liberdade, 532
Liberdade
São Paulo, SP 01502-001
Brazil
+551199518-5913 (Phone)

Joelson Oliveira Sampaio

Getulio Vargas Foundation (FGV), Sao Paulo School of Economics, Students ( email )

Rua Itapeva 474 s.1202
São Paulo
Brazil

HOME PAGE: http://eesp.fgv.br/

Juliano Rodrigues Silva

Fundação Escola de Comércio Álvares Penteado (FECAP) ( email )

Av. Liberdade, 532
Liberdade
São Paulo
Brazil
5511993893249 (Phone)

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