RISK MANAGEMENT AND THE FIRM'S VALUE

This article summarizes theoretical debates and empirical evidence related to corporate risk management as a lever for value creation. Although theoretical research reveals that shareholders' wealth can be increased by hedges against corporate risks, exploiting the capital market imperfections (for example: the cost of differences between managers and shareholders, the cost of external financing, the direct and indirect costs of financial difficulties and the impact of the fiscal elements, income volatility, speculation or industry-wide competition), the empirical evidences remain controversial and without a clear common idea. Based on the analyzes undertaken on the research in the field we performed a clustering of the risk management effects and we have identified some challenges and limitations of the research on the effects of risk management on firm value.