By Gerhard Schroeck
An research of the hyperlinks among danger administration and price creationRisk administration and price production in monetary associations explores various equipment that may be applied to create monetary worth at monetary associations. This beneficial source indicates how banks can use threat administration to create worth for shareholders, addresses some great benefits of risk-adjusted go back on capital (RAROC) measures, and develops the principles for a version to spot comparative benefits that come to be as a result risk-management judgements. it's the merely booklet wanted for banking executives drawn to the connection among danger administration and price production.
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Additional resources for Risk Management and Value Creation in Financial Institutions (Wiley Finance)
Example text
Schmidt and Terberger (1997), pp. , Copeland (1994), p. 97]. 60See Brealey and Myers (1991), p. 23. 61According to Copeland (1994), pp. 106–107, shareholders are the only stakeholders who, in seeking to maximize the value of their claim, simultaneously maximize the value of everyone else’s claim. As residual claimants of a company’s cash flows, they are the only stakeholders who need full information of all other claims in trying to maximize the value of their claim. By that, they implicitly maximize the value of all other claims.
As residual claimants of a company’s cash flows, they are the only stakeholders who need full information of all other claims in trying to maximize the value of their claim. By that, they implicitly maximize the value of all other claims. And they have the incentive to use this information to align other stakeholders’ interests and make their company successful in competitive markets. 62There is (at least anecdotal) evidence that in many cases, decisions that increase shareholder value also benefit other stakeholders and, therefore, do not seem to conflict with their long-term interests, because successful companies create greater value for all stakeholders.
See, for example, Perridon and Steiner (1995), p. 457. 23Expected cash flows can also be influenced by dividend decisions. 24Including the wealth of all claimholders (or stakeholders), especially debt holders. 25Shareholders can take, for example, actions that expropriate wealth from the bond holders. Even though shareholders maximize the value of their stake in the firm, their actions may not be in the best interest of the firm and might reduce the value of the stakes that belong to other stakeholders.