Premium
Who Manages Risk? An Empirical Examination of Risk Management Practices in the Gold Mining Industry
Author(s) -
TUFANO PETER
Publication year - 1996
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1996.tb04064.x
Subject(s) - risk management , financial risk management , shareholder , business , risk aversion (psychology) , shareholder value , stock (firearms) , empirical research , affect (linguistics) , gold mining , enterprise risk management , stock price , accounting , actuarial science , corporate governance , finance , economics , financial economics , expected utility hypothesis , mechanical engineering , paleontology , philosophy , linguistics , chemistry , epistemology , series (stratigraphy) , biology , engineering
This article examines a new database that details corporate risk management activity in the North American gold mining industry. I find little empirical support for the predictive power of theories that view risk management as a means to maximize shareholder value. However, firms whose managers hold more options manage less gold price risk, and firms whose managers hold more stock manage more gold price risk, suggesting that managerial risk aversion may affect corporate risk management policy. Further, risk management is negatively associated with the tenure of firms' CFOs, perhaps reflecting managerial interests, skills, or preferences.