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Cited by 690Corporate Finance and GovernanceAuditing, Earnings Management, GovernanceRisk Management in Financial Firms

The DOI matches its Crossref record; 80 of the 80 references it cites were found in a registry or an index.

Growing Out of Trouble? Corporate Responses to Liability Risk

Open access
Gormley, Todd A., Matsa, David A.·2011·Review of Financial Studies
DOI 10.1093/rfs/hhr011
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Abstract

This article analyzes corporate responses to the liability risk arising from workers' exposure to newly identified carcinogens. We find that firms, especially those with weak balance sheets, tend to respond to such risks by acquiring large, unrelated businesses with relatively high operating cash flows. The diversifying growth appears to be primarily motivated by managers' personal exposure to their firms' risk in that the growth has negative announcement returns and is related to firms' external governance, managerial stockholdings, and institutional ownership. The results suggest that corporate governance is particularly important when firms are exposed to the risk of large, adverse shocks.

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Citations

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Show all 75 references

Research works printed but not linked: 6

  1. Grossman SJ Hart OD . Corporate Financial Structure and Managerial Incentives. In: McCall J , editor. The Economics of Information and Uncertainty. Chicago: University of Chicago Press; 1982. p. 107-40.
  2. LeRoy, 1989, Workers' Compensation in Bankruptcy: How Do the Parties Fare?, Tort & Insurance Law Journal, 24, 593
  3. 10.2307/2729691 · DOI
  4. Moody's Investors Service. Default and Recovery Rates of Corporate Bond Issuers: A Statistical Review of Moody's Ratings Performance 1970–2001 2002.
  5. Peirce, 1988, Workers' Compensation and Occupational Disease: A Return to Original Intent, Oregon Law Review, 67, 649
  6. Treece, 1983, A Parent Corporation's Liability for the Torts of Its Subsidiary in the Context of the Exclusive Remedy Provision of the Workers' Compensation Laws, Insurance Counsel Journal, 50, 609

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Metadata

Authors
Gormley, T. A., & Matsa, D. A.
Affiliations
  • Washington University in St. Louis (US)
  • Northwestern University (US)
ORCID
Gormley, Todd A.
Venue
Review of Financial Studies
Publisher
Oxford University Press (OUP)
Published
2011-04-11
Volume
24
Issue
8
Pages
2781-2821
ISSN
  • 0893-9454 (ISSN-L)
  • 1465-7368
DOI
10.1093/rfs/hhr011
OpenAlex
W2137816507
Cited by
690
References
75
Citations by year
2026: 90 · 2025: 136 · 2024: 113 · 2023: 70 · 2022: 56 · 2021: 59 · 2020: 39 · 2019: 21 · 2018: 27 · 2017: 24 · 2016: 19 · 2015: 10 · 2014: 7 · 2013: 13 · 2012: 4
FWCI
28.37
Type
journal article
Language
en
Open access
Locations
  • Review of Financial Studies (publishedVersion)
  • ScholarlyCommons (University of Pennsylvania) (submittedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Corporate Finance and Governance
  • Social Sciences › Business, Management and Accounting › Accounting › Auditing, Earnings Management, Governance
  • Social Sciences › Business, Management and Accounting › Accounting › Risk Management in Financial Firms
Keywords
liability risk, carcinogens, business diversification, unrelated acquisitions, corporate governance, institutional ownership, operating cash flow, balance sheet strength, adverse shocks

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