财务风险披露外文翻译文献

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财务风险管理外文文献翻译

文献出处: Sharifi, Omid. International Journal of Information, Business and Management6.2 (May 2014): 82-94.原文Financial Risk Management for Small and Medium Sized Enterprises(SMES)Omid SharifiMBA, Department of Commerce and Business Management,Kakatiya University, House No. 2-1-664, Sarawathi negar,1．ABSTRACTmedium sized Enterprises (SME) do also face business risks, Similar to large companies, Small and Mwhich in worst case can cause financial distress and lead to bankruptcy. However, although SME are a major part of the India and also international - economy, research mainly focused on risk management in large corporations. Therefore the aim of this paper is to suggest a possible mean for the risk identification, analysis and monitoring, which can be applied by SME to manage their internal financial risks. For this purpose the financial analysis, which has been used in research to identify indicators for firm bankruptcy, was chosen. The data required for the study was collected from Annual report of the Intec Capital Limited. For the period of five years, from 2008 to 2012.the findings showed the data and the overview can be used in SME risk management.Keywords: Annual report, Small and Medium sized Enterprises, Financial Risks, Risk Management.2．INTRUDUCTIONSmall and medium sized enterprises (SME) differ from large corporations among other aspects first of all in their size. Their importance in the economy however is large . SME sector of India is considered as the backbone of economy contributing to 45% of the industrial output, 40% of India’s exports, employing 60 million people,create 1.3 million jobs every year and produce more than 8000 quality products for the Indian and international markets. With approximately 30 million SMEs in India, 12 million people expected to join the workforce in next 3 years and the sector growing at a rate of 8% per year, Government of India is taking different measures so as to increase their competitiveness in the international market. There are several factors that have contributed towards the growth of Indian SMEs.Few of these include; funding of SMEs by local and foreign investors, the new technology that is used in the market is assisting SMEs add considerable value to their business, various trade directories and trade portals help facilitate trade between buyer and supplier and thus reducing the barrier to trade With this huge potential, backed up by strong government support; Indian SMEs continue to post their growth stories. Despite of this strong growth, there is huge potential amongst Indian SMEs that still remains untapped. Once this untapped potential becomes the source for growth of these units, there would be no stopping to India posting a GDP higher than that of US and China and becoming the world’s economic powerhouse.3. RESEARCH QUESTIONRisk and economic activity are inseparable. Every business decision and entrepreneurial act is connected with risk. This applies also to business of small andmedium sized enterprises as they are also facing several and often the same risks as bigger companies. In a real business environment with market imperfections they need to manage those risks in order to secure their business continuity and add additional value by avoiding or reducing transaction costs and cost of financial distress or bankruptcy. However, risk management is a challenge for most SME. In contrast to larger companies they often lack the necessary resources, with regard to manpower, databases and specialty of knowledge to perform a standardized and structured risk management. The result is that many smaller companies do not perform sufficient analysis to identify their risk. This aspect is exacerbated due to a lack in literature about methods for risk management in SME, as stated by Henschel: The two challenging aspects with regard to risk management in SME are therefore:1. SME differ from large corporations in many characteristics2. The existing research lacks a focus on risk management in SMEThe following research question will be central to this work:1.how can SME manage their internal financial risk?2.Which aspects, based on their characteristics, have to be taken into account for this?3.Which mean fulfils the requirements and can be applied to SME?4. LITERATURE REVIEWIn contrast to larger corporations, in SME one of the owners is often part of the management team. His intuition and experience are important for managing the company.Therefore, in small companies, the (owner-) manager is often responsible for many different tasks and important decisions. Most SME do not have the necessary resources to employ specialists on every position in the company. They focus on their core business and have generalists for the administrative functions. Behr and Guttler find that SME on average have equity ratios lower than 20%. The different characteristics of management, position on procurement and capital markets and the legal framework need to be taken into account when applying management instruments like risk management. Therefore the risk management techniques of larger corporations cannot easily be applied to SME.In practice it can therefore be observed that although SME are not facing less risks and uncertainties than largecompanies, their risk management differs from the practices in larger companies. The latter have the resources to employ a risk manager and a professional, structured and standardized risk management system. In contrast to that, risk management in SME differs in the degree of implementation and the techniques applied. Jonen & Simgen-Weber With regard to firm size and the use of risk management. Beyer, Hachmeister & Lampenius observe in a study from 2010 that increasing firm size among SME enhances the use of risk management. This observation matches with the opinion of nearly 10% of SME, which are of the opinion, that risk management is only reasonable in larger corporations. Beyer, Hachmeister & Lampenius find that most of the surveyed SME identify risks with help of statistics, checklists, creativity and scenario analyses. reveals similar findings and state that most companies rely on key figure systems for identifying and evaluating the urgency of business risks. That small firms face higher costs of hedging than larger corporations. This fact is reducing the benefits from hedging and therefore he advises to evaluate the usage of hedging for each firm individually. The lacking expertise to decide about hedges in SME is also identified by Eckbo, According to his findings, smaller companies often lack the understanding and management capacities needed to use those instruments.5. METHODOLOGY5.1. USE OF FINANCIAL ANALYSIS IN SME RISK MANAGEMENTHow financial analysis can be used in SME risk management?5.1.1 Development of financial risk overview for SMEThe following sections show the development of the financial risk overview. After presenting the framework, the different ratios will be discussed to finally presenta selection of suitable ratios and choose appropriate comparison data.5.1.2. Framework for financial risk overviewThe idea is to use a set of ratios in an overview as the basis for the financial risk management.This provides even more information than the analysis of historical data and allows reacting fast on critical developments and managing the identified risks. However not only the internal data can be used for the risk management. In additionto that also the information available in the papers can be used.Some of them state average values for the defaulted or bankrupt companies one year prior bankruptcy -and few papers also for a longer time horizon. Those values can be used as a comparison value to evaluate the risk situation of the company. For this an appropriate set of ratios has to be chosen.The ratios, which will be included in the overview and analysis sheet, should fulfill two main requirements. First of all they should match the main financial risks of the company in order to deliver significant information and not miss an important risk factor. Secondly the ratios need to be relevant in two different ways. On the one hand they should be applicable independently of other ratios. This means that they also deliver useful information when not used in a regression, as it is applied in many of the papers. On the other hand to be appropriate to use them, the ratios need to show a different development for healthy companies than for those under financial distress. The difference between the values of the two groups should be large enough to see into which the observed company belongs.5.1.3. Evaluation of ratios for financial risk overviewWhen choosing ratios from the different categories, it needs to be evaluated which ones are the most appropriate ones. For this some comparison values are needed in order to see whether the ratios show different values and developments for the two groups of companies. The most convenient source for the comparison values are the research papers as their values are based on large samples of annual reports and by providing average values outweigh outliers in the data. Altman shows a table with the values for 8 different ratios for the five years prior bankruptcy of which he uses 5, while Porporato & Sandin use 13 ratios in their model and Ohlson bases his evaluation on 9 figures and ratios [10]. Khong, Ong & Yap and Cerovac & Ivicic also show the difference in ratios between the two groups, however only directly before bankruptcy and not as a development over time [9]. Therefore this information is not as valuable as the others ([4][15]).In summary, the main internal financial risks in a SME should be covered by financial structure, liquidity and profitability ratios, which are the main categories ofratios applied in the research papers.Financial structureA ratio used in many of the papers is the total debt to total assets ratio, analyzing the financial structure of the company. Next to the papers of Altman, Ohlson and Porporato & Sandin also Khong, Ong & Yap and Cerovac & Ivicic show comparison values for this ratio. Those demonstrate a huge difference in size between the bankrupt and non-bankrupt groups.Figure 1: Development of total debt/ total assets ratioData source: Altman (1968), Porporato & Sandin (2007) and Ohlson (1980), author’s illustrationTherefore the information of total debt/total assets is more reliable and should rather be used for the overview. The other ratios analyzing the financial structure are only used in one of the papers and except for one the reference data only covers the last year before bankruptcy. Therefore a time trend cannot be detected and their relevance cannot be approved.Cost of debtThe costs of debt are another aspect of the financing risk. Porporato & Sandin use the variable interest payments/EBIT for measuring the debt costs. The variable shows how much of the income before tax and interest is spend to finance the debt. This variable also shows a clear trend when firms approach bankruptcy.LiquidityThe ratio used in all five papers to measure liquidity is the current ratio, showingthe relation between current liabilities and current assets (with slight differences in the definition). Instead of the current ratio, a liquidity ratio setting the difference between current assets and current liabilities, also defined as working capital, into relation with total assets could be used.Figure 2: Development of working capital / total assets ratioData source: Altman (1968) and Ohlson (1980); author’s illustratioBasically the ratio says whether the firm would be able to pay back all its’ current liabilities by using its’ current assets. In case it is not able to, which is wh en the liabilities exceed the assets, there is an insolvency risk.6. CRITICAL REVIEW AND CONCLUSIONWhen doing business, constantly decisions have to be made, whose outcome is not certain and thus connected with risk. In order to successfully cope with this uncertainty, corporate risk management is necessary in a business environment, which is influenced by market frictions. Different approaches and methods can be found for applying such a risk management. However, those mainly focus on large corporations, though they are the minority of all companies[13].Furthermore the approaches often require the use of statistical software and expert knowledge, which is most often not available in SME. They and their requirements for risk management have mainly been neglected [17][13].This also includes the internal financial risk management, which was in the focus of this paper. Due to the existing risks in SME and their differences to larger corporations as well as the lack of suitable risk management suggestions in theory, there is a need for a suggestion for a financial risk management in SME. Theaim was to find a possible mean for the risk identification, analysis and monitoring, which can be applied by SME to manage their internal financial risks. For this purpose the financial analysis, which has been used in research to identify indicators for firm bankruptcy, was chosen. Based on an examination and analysis of different papers, despite of their different models, many similarities in the applied ratios could be identified. In general the papers focus on three categories of risk, namely liquidity, profitability and solvency, which are in accordance to the main internal financial risks of SME. From the ratios the most appropriate ones with regard to their effectiveness in identifying risks.译文中小企业的财务风险管理奥米德沙利菲1、摘要中小型企业(SME)和大型企业一样，也面临着业务风险，在最糟糕的情况下，可能会导致金融危机，甚至破产。

银行财务风险的外文文献

银行财务风险的外文文献银行财务风险的外文文献：1. Bank Financial Risk Management: A Practical Guide to Managing and Mitigating Financial Risks本书是由银行财务风险管理专家写的一本实践指南，介绍了银行在管理和缓解金融风险方面的具体策略和方法。

包括了市场风险、信用风险、利率风险、流动性风险等方面的内容。

2. Managing Financial Risks: From Global to Local该书是一本汇集了全球各地知名专家的讲座，内容涵盖了银行金融风险的最新研究成果。

从宏观经济风险到信用风险等方面，对银行金融风险管理提供了全面的视角和思路。

3. Financial Risk Manager Handbook该书是由全球金融风险管理协会GARP撰写的指南手册，涵盖了金融风险管理的理论、实践和案例研究。

介绍了金融风险的识别、量化、监控和管理等重要方面。

4. Risk Management and Financial Institutions该书是一本行业标准教材，由两位金融风险管理领域的权威合著，涉及了金融风险定义、评估和管理的关键内容。

书中还包括了现代金融和银行业的最新发展和趋势等方面的内容。

5. Financial Risk: Theory, Evidence and Implications该书是一本由多位学者合著的金融风险研究专著，旨在为银行业和投资机构等金融市场从业者提供有关金融风险识别和管理的理论和实践指南。

通俗易懂的语言介绍了金融市场的基本原则，包括风险、收益、投资组合构建和风险管理等重要方面。

外文文献及中文翻译_财务风险的重要性How Important is Financial Risk_

How Important is Financial Risk?IntroductionThe financial crisis of 2008 has brought significant attention to the effects of financial leverage. There is no doubt that the high levels of debt financing by financial institutions and households significantly contributed to the crisis. Indeed, evidence indicates that excessive leverage orchestrated by major global banks (e.g., through the mortgage lending and collateralized debt obligations) and the so-called “shadow banking system” may be the underlying cau se of the recent economic and financial dislocation. Less obvious is the role of financial leverage among nonfinancial firms. To date, problems in the U.S. non-financial sector have been minor compared to the distress in the financial sector despite the seizing of capital markets during the crisis. For example, non-financial bankruptcies have been limited given that the economic decline is the largest since the great depression of the 1930s. In fact, bankruptcy filings of non-financial firms have occurred mostly in U.S. industries (e.g., automotive manufacturing, newspapers, and real estate) that faced fundamental economic pressures prior to the financial crisis. This surprising fact begs the question, “How important is financial risk for non-financial firms?” At the heart of this issue is the uncertainty about the determinants of total firm risk as well as components of firm risk.StudyRecent academic research in both asset pricing and corporate finance has rekindled an interest in analyzing equity price risk. A current strand of the asset pricing literature examines the finding of Campbell et al. (2001) that firm-specific (idiosyncratic) risk has tended to increase over the last 40 years. Other work suggests that idiosyncratic risk may be a priced risk factor (see Goyal and Santa-Clara, 2003, among others). Also related to these studies is work by Pástor and Veronesi (2003) showing how investor uncertainty about firm profitability is an important determinant of idiosyncratic risk and firm value. Other research has examined the role of equity volatility in bond pricing (e.g., Dichev, 1998, Campbell, Hilscher, and Szilagyi, 2008).However, much of the empirical work examining equity price risk takes the risk of assets as given or tries to explain the trend in idiosyncratic risk. In contrast, thispaper takes a different tack in the investigation of equity price risk. First, we seek to understand the determinants of equity price risk at the firm level by considering total risk as the product of risks inherent in the firms operations (i.e., economic or business risks) and risks associated with financing the firms operations (i.e., financial risks). Second, we attempt to assess the relative importance of economic and financial risks and the implications for financial policy.Early research by Modigliani and Miller (1958) suggests that financial policy may be largely irrelevant for firm value because investors can replicate many financial decisions by the firm at a low cost (i.e., via homemade leverage) and well-functioning capital markets should be able to distinguish between financial and economic distress. Nonetheless, financial policies, such as adding debt to the capital structure, can magnify the risk of equity. In contrast, recent research on corporate risk management suggests that firms may also be able to reduce risks and increase value with financial policies such as hedging with financial derivatives. However, this research is often motivated by substantial deadweight costs associated with financial distress or other market imperfections associated with financial leverage. Empirical research provides conflicting accounts of how costly financial distress can be for a typical publicly traded firm.We attempt to directly address the roles of economic and financial risk by examining determinants of total firm risk. In our analysis we utilize a large sample of non-financial firms in the United States. Our goal of identifying the most important determinants of equity price risk (volatility) relies on viewing financial policy as transforming asset volatility into equity volatility via financial leverage. Thus, throughout the paper, we consider financial leverage as the wedge between asset volatility and equity volatility. For example, in a static setting, debt provides financial leverage that magnifies operating cash flow volatility. Because financial policy is determined by owners (and managers), we are careful to examine the effects of firms’ asset and operating characteristics on financial policy. Specifically, we examine a variety of characteristics suggested by previous research and, as clearly as possible, distinguish between those associated with the operations of the company (i.e. factors determining economic risk) and those associated with financing the firm (i.e. factors determining financial risk). We then allow economic risk to be a determinant of financial policy in the structural framework of Leland and Toft (1996), or alternatively,in a reduced form model of financial leverage. An advantage of the structural model approach is that we are able to account for both the possibility of financial and operating implications of some factors (e.g., dividends), as well as the endogenous nature of the bankruptcy decision and financial policy in general.Our proxy for firm risk is the volatility of common stock returns derived from calculating the standard deviation of daily equity returns. Our proxies for economic risk are designed to capture the essential characteristics of the firms’ operations and assets that determine the cash flow generating process for the firm. For example, firm size and age provide measures of line of- business maturity; tangible assets (plant, property, and equipment) serve as a proxy for the ‘hardness’ of a firm’s assets; capital expenditures measure capital intensity as well as growth potential. Operating profitability and operating profit volatility serve as measures of the timeliness and riskiness of cash flows. To understand how financial factors affect firm risk, we examine total debt, debt maturity, dividend payouts, and holdings of cash and short-term investments.The primary result of our analysis is surprising: factors determining economic risk for a typical company explain the vast majority of the variation in equity volatility. Correspondingly, measures of implied financial leverage are much lower than observed debt ratios. Specifically, in our sample covering 1964-2008 average actual net financial (market) leverage is about 1.50 compared to our estimates of between 1.03 and 1.11 (depending on model specification and estimation technique). This suggests that firms may undertake other financial policies to manage financial risk and thus lower effective leverage to nearly negligible levels. These policies might include dynamically adjusting financial variables such as debt levels, debt maturity, or cash holdings (see, for example, Acharya, Almeida, and Campello, 2007). In addition, many firms also utilize explicit financial risk management techniques such as the use of financial derivatives, contractual arrangements with investors (e.g. lines of credit, call provisions in debt contracts, or contingencies in supplier contracts), special purpose vehicles (SPVs), or other alternative risk transfer techniques.The effects of our economic risk factors on equity volatility are generally highly statistically significant, with predicted signs. In addition, the magnitudes of the effects are substantial. We find that volatility of equity decreases with the size and age of the firm. This is intuitive since large and mature firms typically have more stable lines ofbusiness, which should be reflected in the volatility of equity returns. Equity volatility tends to decrease with capital expenditures though the effect is weak. Consistent with the predictions of Pástor and Veronesi (2003), we find that firms with higher profitability and lower profit volatility have lower equity volatility. This suggests that companies with higher and more stable operating cash flows are less likely to go bankrupt, and therefore are potentially less risky. Among economic risk variables, the effects of firm size, profit volatility, and dividend policy on equity volatility stand out. Unlike some previous studies, our careful treatment of the endogeneity of financial policy confirms that leverage increases total firm risk. Otherwise, financial risk factors are not reliably related to total risk.Given the large literature on financial policy, it is no surprise that financial variables are,at least in part, determined by the economic risks firms take. However, some of the specific findings are unexpected. For example, in a simple model of capital structure, dividend payouts should increase financial leverage since they represent an outflow of cash from the firm (i.e., increase net debt). We find that dividends are associated with lower risk. This suggests that paying dividends is not as much a product of financial policy as a characteristic of a firm’s operations(e.g., a mature company with limited growth opportunities). We also estimate how sensitivities to different risk factors have changed over time. Our results indicate that most relations are fairly stable. One exception is firm age which prior to 1983 tends to be positively related to risk and has since been consistently negatively related to risk. This is related to findings by Brown and Kapadia (2007) that recent trends in idiosyncratic risk are related to stock listings by younger and riskier firms.Perhaps the most interesting result from our analysis is that our measures of implied financial leverage have declined over the last 30 years at the same time that measures of equity price risk (such as idiosyncratic risk) appear to have been increasing. In fact, measures of implied financial leverage from our structural model settle near 1.0 (i.e., no leverage) by the end of our sample. There are several possible reasons for this. First, total debt ratios for non-financial firms have declined steadily over the last 30 years, so our measure of implied leverage should also decline. Second, firms have significantly increased cash holdings, so measures of net debt (debt minus cash and short-term investments) have also declined. Third, the composition of publicly traded firms has changed with more risky (especially technology-oriented)firms becoming publicly listed. These firms tend to have less debt in their capital structure. Fourth, as mentioned above, firms can undertake a variety of financial risk management activities. To the extent that these activities have increased over the last few decades, firms will have become less exposed to financial risk factors.We conduct some additional tests to provide a reality check of our results. First, we repeat our analysis with a reduced form model that imposes minimum structural rigidity on our estimation and find very similar results. This indicates that our results are unlikely to be driven by model misspecification. We also compare our results with trends in aggregate debt levels for all U.S. non-financial firms and find evidence consistent with our conclusions. Finally, we look at characteristics of publicly traded non-financial firms that file for bankruptcy around the last three recessions and find evidence suggesting that these firms are increasingly being affected by economic distress as opposed to financial distress.ConclusionIn short, our results suggest that, as a practical matter, residual financial risk is now relatively unimportant for the typical U.S. firm. This raises questions about the level of expected financial distress costs since the probability of financial distress is likely to be lower than commonly thought for most companies. For example, our results suggest that estimates of the level of systematic risk in bond pricing may be biased if they do not take into account the trend in implied financial leverage (e.g., Dichev, 1998). Our results also bring into question the appropriateness of financial models used to estimate default probabilities, since financial policies that may be difficult to observe appear to significantly reduce risk. Lastly, our results imply that the fundamental risks born by shareholders are primarily related to underlying economic risks which should lead to a relatively efficient allocation of capital.Some readers may be tempted to interpret our results as indicating that financial risk does not matter. This is not the proper interpretation. Instead, our results suggest that firms are able to manage financial risk so that the resulting exposure to shareholders is low compared to economic risks. Of course, financial risk is important to firms that choose to take on such risks either through high debt levels or a lack of risk management. In contrast, our study suggests that the typical non-financial firm chooses not to take these risks. In short, gross financial risk may be important, but firms can manage it. This contrasts with fundamental economic and business risks thatare more difficult (or undesirable) to hedge because they represent the mechanism by which the firm earns economic profits.References[1]Shyam,Sunder.Theory Accounting and Control[J].An Innternational Theory on PublishingComPany.2005[2]Ogryezak,W,Ruszeznski,A. Rom Stomchastic Dominance to Mean-Risk Models:Semide-Viations as Risk Measures[J].European Journal of Operational Research.[3] Borowski, D.M., and P.J. Elmer. An Expert System Approach to Financial Analysis: the Case of S&L Bankruptcy [J].Financial Management, Autumn.2004;[4] Casey, C.and N. Bartczak. Using Operating Cash Flow Data to Predict Financial Distress: Some Extensions[J]. Journal of Accounting Research,Spring.2005;[5] John M.Mulvey,HafizeGErkan.Applying CVaR for decentralized risk management of financialcompanies[J].Journal of Banking&Finanee.2006;[6] Altman. Credit Rating:Methodologies,Rationale and Default Risk[M]．Risk Books,London.译文：财务风险的重要性引言2008年的金融危机对金融杠杆的作用产生重大影响。

中小企业的财务风险管理外文文献翻译2014年译文3000字

中小企业的财务风险管理外文文献翻译2014年译文3000字Financial Risk Management for Small and Medium-Sized Enterprises (SMEs)Financial risk management is an essential aspect of business management。

particularly for small and medium-sized enterprises (SMEs)。

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公司财务风险中英文对照外文翻译文献

中英文资料外文翻译外文资料Financial ﬁrm bankruptcy and systemic riskIn Fall 2008 when the Federal Reserve and the Treasury injected $85 billion into the insurance behemoth American International Group (AIG), themoney lent to AIGwent straight to counterparties, and very few funds remained with the insurer. Among the largest recipients was Goldman Sachs, to whomabout $12 billionwas paid to undoAIG’s credit default swaps (CDSs). The bailout plan focused on repaying the debt by slowly selling off AIG’s assets, w ith no intention of maintaining jobs or allowing the CDSmarket to continue to function as before. Thus, the government’s effort to avoid systemic risk with AIG was mainly about ensuring that ﬁrms with which AIG had done business did not fail as a result. T he concerns are obviously greatest vis-a-vis CDSs, ofwhich AIG had over $400 billion contracts outstanding in June 2008.In contrast, the government was much less enthusiastic about aiding General Motors, presumably because they believed its failure would not cause major macroeconomic repercussions by imposing losses on related ﬁrms. This decision is consistent with the view in macroeconomicresearch that financialﬁrmbankruptcies pose a greater amount of systemic risk than nonfinancial firmbankruptcies. For example, Bordo and Haubrich (2009) conclude that “...more severe ﬁnancial events are associated withmore severe recessions...” Likewise, Bernanke (1983) argues the Great Depressionwas so severe because ofweakness in the banking systemthat affected the amount of credit available for investment. Bernanke et al. (1999) hypothesize a financial accelerator mechanism, whereby distress in one sector of the economy leads to more precarious balance sheets and tighter credit conditions. This in turn leads to a drop in investment, which is followed by less lending and a widespread downturn. Were shocks to the economy always to come in the form of distress at nonﬁnancial ﬁrms, these authors argue that the business downturns would not be so severe.We argue instead that the contagious impact of a nonfinancial firm’s bankruptcy is expected to be far larger than that of a financial ﬁrm like AIG, although neither would be catastrophic to the U.S. economy through counterparty risk channels. This is not to say that an episode ofwidespread financial distress among our largest banks would not be followed by an especially severe recession, only that such failures would not cause a recession or affect the depth of a recession. Rather such bankruptcies are symptomatic of common factors in portfolios that lead to wealth losses regardless of whether any firm ﬁles for bankruptcy.Pervasive ﬁnancial fragility may occur because the failure of one ﬁrm leads to the failure of other ﬁrms which cascades through the system (e.g., Davis and Lo, 1999; Jarrow and Yu, 2001). Or systemic risk may wreak havoc when a number of ﬁnancial ﬁrms fail simultaneously, as in the Great Depression when more than 9000 banks failed (Benston, 1986). In the former case, the failure of one ﬁrm, such as AIG, Lehman Brothers or Bear Stearns, could lead to widespread failure through ﬁnancial contracts such as CDSs. In the latter case, the fact that so many ﬁnancial institutions have failed means that both the money supply and the amount of credit in the economy could fall so far as to cause a large drop in economic activity (Friedman and Schwartz, 1971).While a weak ﬁnancial systemcould cause a recession, the recession would not arise because one ﬁrm was allowed to ﬁle bankruptcy. Further, should one or the other ﬁrmgo bankrupt, the nonﬁnancial ﬁrmwould have the greater impact on the economy.Such extreme real effects that appear to be the result of ﬁnancial ﬁrm fragility have led to a large emphasis on the prevention of systemic risk problems by regulators. Foremost amo ng these policies is “too big to fail” (TBTF), the logic of which is that the failure of a large ﬁnancial institution will have ramifications for other ﬁnancial institutions and therefore the risk to the economywould be enormous. TBTF was behind the Fed’s decisions to orchestrate the merger of Bear Stearns and J.P.Morgan Chase in 2008, its leadership in the restructuring of bank loans owed by Long Term Capital Management (LTCM), and its decision to prop up AIG. TBTF may be justiﬁed if the outcome is preven tion of a major downswing in the economy. However, if the systemic risks in these episodes have been exaggerated or the salutary effects of these actions overestimated, then the cost to the efﬁciency of the capital allocation system may far outweigh any po tential beneﬁts from attempting to avoid another Great Depression.No doubt, no regulator wants to take the chance of standing down while watching over another systemic risk crisis, sowe do not have the ability to examine empiricallywhat happens to the economy when regulators back off. There are very fewinstances in themodern history of the U.S.where regulators allowed the bankruptcy of amajor ﬁnancial ﬁrm.Most recently,we can point to the bankruptcy of Lehman,which the Fed pointedly allowed to fail.However,with only one obvious casewhere TBTFwas abandoned, we have only an inkling of how TBTF policy affects systemic risk. Moreover, at the same time that Lehman failed, the Fed was intervening in the commercial paper market and aiding money marketmutual fundswhile AIGwas downgraded and subsequently bailed out. In addition, the Federal Reserve and the Treasury were scaremongering about the prospects of a second Great Depression to make the passage of TARPmore likely. Thuswewill never knowifthemarket downturn th at followed the Lehman bankruptcy reﬂected fear of contagion from Lehman to the real economy or fear of the depths of existing problems in the real economy that were highlighted so dramatically by regulators.In this paper we analyze the mechanisms by which such risk could cause an economy-wide col-lapse.We focus on two types of contagion that might lead to systemic risk problems: (1) information contagion,where the information that one ﬁnancial ﬁrmis troubled is associatedwith negative shocksat other ﬁnanc ial institutions largely because the ﬁrms share common risk factors; or (2) counterparty contagion,where one important ﬁnancial institution’s collapse leads directly to troubles at other cred-itor ﬁrms whose troubles snowball and drive other ﬁrms into distress. The efﬁcacy of TBTF policies depends crucially on which of these two types of systemic riskmechanisms dominates.Counterparty contagion may warrant intervention in individual bank failureswhile information contagion does not.If regulators do not ste p in to bail out an individual ﬁrm, the alternative is to let it fail. In the case of a bank, the process involves the FDIC as receiver and the insured liabilities of the ﬁrmare very quickly repaid. In contrast, the failure of an investment bank or hedge fund does not involve the FDIC andmay closely resemble a Chapter 11 or Chapter 7 ﬁling of a nonﬁnancial ﬁrm. However, if the nonbank ﬁnancial ﬁrm inquestion has liabilities that are covered by the Securities Industry Protection Corporation (SIPC), the ﬁrmi s required by lawunder the Securities Industry Protection Act (SIPA) to liquidate under Chapter 7 (Don and Wang, 1990). This explains in large partwhy only the holding company of Lehman ﬁled for bankruptcy in 2008 and its broker–dealer subsidiaries were n ot part of the Chapter 11 ﬁling.A major fear of a ﬁnancial ﬁrm liquidation, whether done through the FDIC or as required by SIPA, is that ﬁre sales will depress recoveries for the creditors of the failed ﬁnancial ﬁrm and that these ﬁre saleswill have ramiﬁcations for other ﬁrms in related businesses, even if these businesses do not have direct ties to the failed ﬁrm (Shleifer and Vishny, 1992). This fear was behind the Fed’s decision to extend liquidity to primary dealers inMarch 2008 – Fed Chairman Bernanke explained in a speech on ﬁnancial system stability that“the risk developed that liquidity pressuresmight force dealers to sell assets into already illiquid markets. Thismight have resulted in...[a] ﬁre sale scenario..., inwhich a cascade of failures andliquidations sharply depresses asset prices, with adverse ﬁnancial and economic implications.”(May 13, 2008 speech at the Federal Reserve Bank of Atlanta conference at Sea Island, Georgia) The fear of potential ﬁre sales is expressed in further detail in t he same speech as a reason for the merger of Bear Stearns and JP Morgan:“Bear...would be forced to ﬁle for bankruptcy...[which] wouldhave forced Bear’s secured creditors and counterparties to liquidate the underlying collateral and, given the illiquidity of markets, those creditors and counter parties might well have sustained losses. If they responded to losses or the unexpected illiquidity of their holdings by pulling back from providing secured ﬁnancing to other ﬁrms, a much broader liquidity crisis wou ld have ensued.”The idea that creditors of a failed ﬁrm are forced to liquidate assets, and to do so with haste, is counter to the basic tenets of U.S. bankruptcy laws, which are set up to allow creditors the ability to maximize the value of the assets now under their control. If that value is greatest when continuing to operate, the laws allow such a reorganization of the ﬁrm. If the value in liquidation is higher, the laws are in no way prejudiced against selling assets in an orderly procedure. Bankruptcy actually reduces the likelihood of ﬁre sales because assets are not sold quickly once a bankruptcy ﬁling occurs. Cash does not leave the bankrupt firm without the approval of a judge.Without pressure to pay debts, the ﬁrm can remain in bankruptcy for months as it tries to decide on the best course of action. Indeed, a major complaint about the U.S. code is that debtors can easily delay reorganizing and slow down the process.If, however, creditors and management believe that speedy assets sales are in their best interest, then they can press the bankruptcy judge to approve quick action. This occurred in the case of Lehman’s asset sale to Barclays,which involved hiring workers whomight have split up were their divisions not sold quickly.金融公司破产及系统性的风险2008年秋，当美联邦储备委员会和财政部拒绝85亿美金巨资保险投入到美国国际集团时，这边借给美国国际集团的货款就直接落到了竞争对手手里，而投保人只得到极少的一部分资金。

财务风险外文文献

外文文献The Important Of Financial RiskSohnke M. Bartram Gregory W. Brown and Murat AtamerAbstract:This paper examines the determinants of equity price risk for a largesample of non-financial corporations in the United States from 1964 to 2008. Weestimate both structural and reduced form models to examine the endogenous natureof corporate financial characteristics such as total debt debt maturity cash holdingsand dividend policy. We find that the observed levels of equity price risk areexplained primarily by operating and asset characteristics such as firm age size assettangibility as well as operating cash flow levels and volatility. In contrast impliedmeasures of financial risk are generally low and more stable than debt-to-equity ratios.Our measures of financial risk have declined over the last 30 years even as measuresof equity volatility e.g. idiosyncratic risk have tended to increase. Consequentlydocumented trends in equity price risk are more than fully accounted for by trends inthe riskiness of firms’assets. Taken together the results suggest that the typical U.S.firm substantially reduces financial risk by carefully managing financial policies. As aresult residual financial risk now appears negligible relative to underlying economicrisk for a typical non-financial firm.Keywords：Capital structure；financial risk；risk management；corporate finance1 1.IntroductionThe financial crisis of 2008 has brought significant attention to the effects offinancial leverage. There is no doubt that the high levels of debt financing by financialinstitutions and households significantly contributed to the crisis. Indeed evidenceindicates that excessive leverage orchestrated by major global banks e.g. through themortgage lending and collateralized debt obligations and the so-called “shadowbanking system”may be the underlying cause of the recent economic and financialdislocation. Less obvious is the role of financial leverage among nonfinancial firms.To date problems in the U.S. non-financial sector have been minor compared to thedistress in the financial sector despite the seizing of capital markets during the crisis.For example non-financial bankruptcies have been limited given that the economicdecline is the largest since the great depression of the 1930s. In fact bankruptcyfilings of non-financial firms have occurred mostly in U.S. industries e.g.automotive manufacturing newspapers and real estate that faced fundamentaleconomic pressures prior to the financial crisis. This surprising fact begs the question“How important is financial risk for non-financial firms”At the heart of this issue isthe uncertainty about the determinants of total firm risk as well as components of firmrisk.Recent academic research in both asset pricing and corporate financehasrekindled an interest in analyzing equity price risk. A current strand of the assetpricing literature examines the finding of Campbell et al. 2001 that firm-specificidiosyncratic risk has tended to increase over the last 40 years. Other work suggeststhat idiosyncratic risk may be a priced risk factor see Goyal and Santa-Clara 2003among others. Also related to these studies is work by Pástor and Veronesi 2003showing how investor uncertainty about firm profitability is an important determinantof idiosyncratic risk and firm value. Other research has examined the role of equityvolatility in bond pricing e.g. Dichev 1998 Campbell Hilscher and Szilagyi2008.However much of the empirical work examining equity price risk takes the riskof assets as given or tries to explain the trend in idiosyncratic risk. In contrast thispaper takes a different tack in the investigation of equity price risk. First we seek tounderstand the determinants of equity price risk at the firm level by considering totalrisk as the product of risks inherent in the firms operations i.e. economic or businessrisks and risks associated with financing the firms operations i.e. financial risks.Second we attempt to assess the relative importance of economic and financial risksand the implications for financial policy.Early research by Modigliani and Miller 1958 suggests that financial policymay be largely irrelevant for firm value because investors can replicate manyfinancial decisions by the firm at a low cost i.e. via homemade leverage andwell-functioning capital markets should be able to distinguish between financial andeconomic distress. Nonetheless financial policies such as adding debt to the capitalstructure can magnify the risk of equity. In contrast recent research on corporate riskmanagement suggests that firms may also be able to reduce risks and increase valuewith financial policies such as hedging with financial derivatives. However thisresearch is often motivated by substantial deadweight costs associated with financialdistress or other market imperfections associated with financial leverage. Empiricalresearch provides conflicting accounts of how costly financial distress can be for atypical publicly traded firm.We attempt to directly address the roles of economic and financial risk byexamining determinants of total firm risk. In our analysis we utilize a large sample ofnon-financial firms in the United States.Our goal of identifying the most importantdeterminants of equity price risk volatility relies on viewing financial policy astransforming asset volatility into equity volatility via financial leverage. Thusthroughout the paper we consider financial leverage as the wedge between assetvolatility and equity volatility. For example in a static setting debt provides financialleverage that magnifies operating cash flow volatility. Because financial policy isdetermined by owners and managers we are careful to examine the effects of firms’asset and operating characteristics on financial policy. Specifically we examine avariety of characteristics suggested by previous research and as clearly as possibledistinguish between those associated of the company(i.e. factors determining economic risk) and those associated with financing the firm(i.e. factors determining financial risk).We then allow economic risk to be a determinant of financial policy in the structural framework of Leland and Toft(1996),or alternatively, in a reduced formmodel of financial leverage.An advantage of the structural model approach is that we are able to account for both the possibility of financial and operating implciations of some factors(e.g .dividends),as well as the endogenous nature of the bankruptcy decision and financial policy in general.Our proxy for firm risk is the volantility if common stock returns derived from calculating the standard deviation of daliy equity returns.Our proxies for econmic risk are designed to capture the essential charactersitics of the firm’s operations and assets that determine the cash flow generating process for the firm.For example,firm size and age provide measures of line of –business maturity; tangible assets(plant,property,and equipment)serve as a proxy for the ‘hardness’of a firm’s assets;capital expenditures measure captial intensity as well as growth potential.Operating profitability and operating profit volatility serve as measures of the timeliness and riskiness of cash flows.To understand how financial factors affect firm risk,we examine total debt,debt maturity,dividend payouts,and holdings of cash and short-term investments.The primary resuit or our analysis is surpriing:factors determining economic risk for a typical company exlain the vast majority of the varation in equity volatility.Correspondingly,measures of implied financial leverage are much lower than observed debt ratios. Specifically, in our sample covering 1964-2008 average actual net financial (market) leverage is 1.50 compared to our estimates of between 1.03 and 1.11 (depending on model specification and estimation technique).This suggests that firms may undertake other financial policise to manage financial risk and thus lower effective leverage to nearly negligible levels.These policies might include dynamically adjusting financial variables such as debt levels,debt maturity,or cash holdings (see,for example , Acharya,Almeida,and Campello,2007).In addition,many firms also utilize explicit financial risk management techniques such as the use of financial dervatives,contractual arrangements with investors (e.g. lines of credit,call provisions in debt contracts ,or contingencies in supplier contracts ),spcial purpose vehicles (SPVs),or other alternative risk transfer techniques.The effects of our ecnomic risk factors on equity volatility are generally highly statiscally significant, with predicted size and age of the firm.This is intuitive since large and mature firms typically have more stable lines of business,which shoule be reflected in the volatility. This suggests that companties with higher and more stable operating cash flows are less likely to go bankrupt, and therefore are potentially less risky .Among economic risk variables,the effects of firm size ,prfit volatility,and dividend policy on equity volatility stand out. Unlike some previous studies,our careful treatment of the endogeneity of financial policy confirms that leveage increases total firm risk. Otherwise,fiancial risk factors are not reliably to total risk.Given the large literature on financial policy , it is no surprise that financial variables are , at least in part , determined by the econmic risks frims take.However, some of the specific findings are unexpected. For example , in a simple model of capital structure ,dividend payouts should increase financial leverage since they represent an outflow of cash from the firm(i.e.,increase net debt ).We find that dividends are associated with lower risk. This suggests that paying dividends is not asmuch a product of financial policy as a characteristic of a firm’s operations(e.g.,a mature company with limited growth opportunities). We also estimate how sensitivities to different risk factors have changed over time.Our result indicate that most relations are fairly stable. One exception is firm age which prior to 1983 tends to be positively related to risk and has since been consisitently negatively related to risk.This is related to findings by Brown and Kapadoa (2007) that recent trends in idiosyncratic risk are related to stock listings by younger and riskier firms.。

财务风险管理中英文对照外文翻译文献

中英文资料翻译Financial Risk ManagementAlthough financial risk has increased significantly in recent years, risk and risk management are not contemporary issues. The result of increasingly global markets is that risk may originate with events thousands of miles away that have nothing to do with the domestic market. Information is available instantaneously, which means that change, and subsequent market reactions, occur very quickly. The economic climate and markets can be affected very quickly by changes in exchange rates, interest rates, and commodity prices. Counterparties can rapidly become problematic. As a result, it is important to ensure financial risks are identified and managed appropriately. Preparation is a key component of risk management.What Is Risk?Risk provides the basis for opportunity. The terms risk and exposure have subtle differences in their meaning. Risk refers to the probability of loss, while exposure is the possibility of loss, although they are often used interchangeably. Risk arises as a result of exposure.Exposure to financial markets affects most organizations, either directly or indirectly. When an organization has financial market exposure, there is a possibility of loss but also an opportunity for gain or profit. Financial market exposure may provide strategic or competitive benefits.Risk is the likelihood of losses resulting from events such as changes in market prices. Events with a low probability of occurring, but that may result in a high loss, are particularly troublesome because they are often not anticipated. Put another way, risk is the probable variability of returns.Since it is not always possible or desirable to eliminate risk, understanding it is an important step in determining how to manage it. Identifying exposures and risks forms the basis for an appropriate financial risk management strategy.How Does Financial Risk?Financial risk arises through countless transactions of a financial nature, including sales and purchases, investments and loans, and various other business activities. It can arise as a result of legal transactions, new projects, mergers and acquisitions, debt financing, the energy component of costs, or through the activities of management, stakeholders, competitors, foreign governments, or weather. When financial prices change dramatically, it can increase costs, reduce revenues, or otherwise adversely impact the profitability of an organization. Financial fluctuations may make it more difficult to plan and budget, price goods and services, and allocate capital.There are three main sources of financial risk:1. Financial risks arising from an organization’s exposure to changes in market prices, such as interest rates, exchange rates, and commodity prices.2. Financial risks arising from the actions of, and transactions with, other organizations such as vendors, customers, and counterparties in derivatives transactions3. Financial risks resulting from internal actions or failures of the organization, particularly people, processes, and systemsWhat Is Financial Risk Management?Financial risk management is a process to deal with the uncertainties resulting from financial markets. It involves assessing the financial risks facing an organization and developing management strategies consistent with internal priorities and policies. Addressing financial risks proactively may provide an organization with a competitive advantage. It also ensures that management, operational staff, stakeholders, and the board of directors are in agreement on key issues of risk.Managing financial risk necessitates making organizational decisions about risks that are acceptable versus those that are not. The passive strategy of taking no action is the acceptance of all risks by default.Organizations manage financial risk using a variety of strategies and products. It is important to understand how these products and strategies work to reduce riskwithin the context of the organization’s risk tolerance and objectives.Strategies for risk management often involve derivatives. Derivatives are traded widely among financial institutions and on organized exchanges. The value of derivatives contracts, such as futures, forwards, options, and swaps, is derived from the price of the underlying asset. Derivatives trade on interest rates, exchange rates, commodities, equity and fixed income securities, credit, and even weather.The products and strategies used by market participants to manage financial risk are the same ones used by speculators to increase leverage and risk. Although it can be argued that widespread use of derivatives increases risk, the existence of derivatives enables those who wish to reduce risk to pass it along to those who seek risk and its associated opportunities.The ability to estimate the likelihood of a financial loss is highly desirable. However, standard theories of probability often fail in the analysis of financial markets. Risks usually do not exist in isolation, and the interactions of several exposures may have to be considered in developing an understanding of how financial risk arises. Sometimes, these interactions are difficult to forecast, since they ultimately depend on human behavior.The process of financial risk management is an ongoing one. Strategies need to be implemented and refined as the market and requirements change. Refinements may reflect changing expectations about market rates, changes to the business environment, or changing international political conditions, for example. In general, the process can be summarized as follows:1、Identify and prioritize key financial risks.2、Determine an appropriate level of risk tolerance.3、Implement risk management strategy in accordance with policy.4、Measure, report, monitor, and refine as needed.DiversificationFor many years, the riskiness of an asset was assessed based only on the variability of its returns. In contrast, modern portfolio theory considers not only an asset’s riskiness, but also its contribution to the overall riskiness of the portfolio towhich it is added. Organizations may have an opportunity to reduce risk as a result of risk diversification.In portfolio management terms, the addition of individual components to a portfolio provides opportunities for diversification, within limits. A diversified portfolio contains assets whose returns are dissimilar, in other words, weakly or negatively correlated with one another. It is useful to think of the exposures of an organization as a portfolio and consider the impact of changes or additions on the potential risk of the total.Diversification is an important tool in managing financial risks. Diversification among counterparties may reduce the risk that unexpected events adversely impact the organization through defaults. Diversification among investment assets reduces the magnitude of loss if one issuer fails. Diversification of customers, suppliers, and financing sources reduces the possibility that an organization will have its business adversely affected by changes outside management’s control. Although the risk of loss still exists, diversification may reduce the opportunity for large adverse outcomes.Risk Management ProcessThe process of financial risk management comprises strategies that enable an organization to manage the risks associated with financial markets. Risk management is a dynamic process that should evolve with an organization and its business. It involves and impacts many parts of an organization including treasury, sales, marketing, legal, tax, commodity, and corporate finance.The risk management process involves both internal and external analysis. The first part of the process involves identifying and prioritizing the financial risks facing an organization and understanding their relevance. It may be necessary to examine the organization and its products, management, customers, suppliers, competitors, pricing, industry trends, balance sheet structure, and position in the industry. It is also necessary to consider stakeholders and their objectives and tolerance for risk.Once a clear understanding of the risks emerges, appropriate strategies can be implemented in conjunction with risk management policy. For example, it might bepossible to change where and how business is done, thereby reducing the organization’s exposure and risk. Alternatively, existing exposures may be managed with derivatives. Another strategy for managing risk is to accept all risks and the possibility of losses.There are three broad alternatives for managing risk:1. Do nothing and actively, or passively by default, accept all risks.2. Hedge a portion of exposures by determining which exposures can and should be hedged.3. Hedge all exposures possible.Measurement and reporting of risks provides decision makers with information to execute decisions and monitor outcomes, both before and after strategies are taken to mitigate them. Since the risk management process is ongoing, reporting and feedback can be used to refine the system by modifying or improving strategies.An active decision-making process is an important component of risk management. Decisions about potential loss and risk reduction provide a forum for discussion of important issues and the varying perspectives of stakeholders.Factors that Impact Financial Rates and PricesFinancial rates and prices are affected by a number of factors. It is essential to understand the factors that impact markets because those factors, in turn, impact the potential risk of an organization.Factors that Affect Interest RatesInterest rates are a key component in many market prices and an important economic barometer. They are comprised of the real rate plus a component for expected inflation, since inflation reduces the purchasing power of a lender’s assets .The greater the term to maturity, the greater the uncertainty. Interest rates are also reflective of supply and demand for funds and credit risk.Interest rates are particularly important to companies and governments because they are the key ingredient in the cost of capital. Most companies and governments require debt financing for expansion and capital projects. When interest rates increase, the impact can be significant on borrowers. Interest rates also affect prices in otherfinancial markets, so their impact is far-reaching.Other components to the interest rate may include a risk premium to reflect the creditworthiness of a borrower. For example, the threat of political or sovereign risk can cause interest rates to rise, sometimes substantially, as investors demand additional compensation for the increased risk of default.Factors that influence the level of market interest rates include:1、Expected levels of inflation2、General economic conditions3、Monetary policy and the stance of the central bank4、Foreign exchange market activity5、Foreign investor demand for debt securities6、Levels of sovereign debt outstanding7、Financial and political stabilityYield CurveThe yield curve is a graphical representation of yields for a range of terms to maturity. For example, a yield curve might illustrate yields for maturity from one day (overnight) to 30-year terms. Typically, the rates are zero coupon government rates.Since current interest rates reflect expectations, the yield curve provides useful information about the market’s expectations of future interest rates. Implied interest rates for forward-starting terms can be calculated using the information in the yield curve. For example, using rates for one- and two-year maturities, the expected one-year interest rate beginning in one year’s time can be determined.The shape of the yield curve is widely analyzed and monitored by market participants. As a gauge of expectations, it is often considered to be a predictor of future economic activity and may provide signals of a pending change in economic fundamentals.The yield curve normally slopes upward with a positive slope, as lenders/investors demand higher rates from borrowers for longer lending terms. Since the chance of a borrower default increases with term to maturity, lenders demand to be compensated accordingly.Interest rates that make up the yield curve are also affected by the expected rate of inflation. Investors demand at least the expected rate of inflation from borrowers, in addition to lending and risk components. If investors expect future inflation to be higher, they will demand greater premiums for longer terms to compensate for this uncertainty. As a result, the longer the term, the higher the interest rate (all else being equal), resulting in an upward-sloping yield curve.Occasionally, the demand for short-term funds increases substantially, and short-term interest rates may rise above the level of longer term interest rates. This results in an inversion of the yield curve and a downward slope to its appearance. The high cost of short-term funds detracts from gains that would otherwise be obtained through investment and expansion and make the economy vulnerable to slowdown or recession. Eventually, rising interest rates slow the demand for both short-term and long-term funds. A decline in all rates and a return to a normal curve may occur as a result of the slowdown.财务风险管理尽管近年来金融风险大大增加，但风险和风险管理不是当代的主要问题。

财务风险管理外文文献翻译译文

Although financial risk has increased significantly in recent years, risk and risk management are not contemporary issues. The result of increasingly global markets is that risk may originate with events thousands of miles away that have nothing to do with the domestic market. Information is available instantaneously, which means that change, and subsequent market reactions, occur very quickly. The economic climate and markets can be affected very quickly by changes in exchange rates, interest rates, and commodity prices. Counterparties can rapidly become problematic. As a result, it is important to ensure financial risks are identified and managed appropriately. Preparation is a key component of risk management.Risk provides the basis for opportunity. The terms risk and exposure have subtle differences in their meaning. Risk refers to the probability of loss, while exposure is the possibility of loss, although they are often used interchangeably. Risk arises as a result of exposure.Exposure to financial markets affects most organizations, either directly or indirectly. When an organization has financial market exposure, there is a possibility of loss but also an opportunity for gain or profit. Financial market exposure may provide strategic or competitive benefits.Risk is the likelihood of losses resulting from events such as changes in market prices. Events with a low probability of occurring, but that may result in a high loss, are particularly troublesome because they are often not anticipated. Put another way, risk is the probable variability of returns.Since it is not always possible or desirable to eliminate risk,understanding it is an important step in determining how to manage it. Identifying exposures and risks forms the basis for an appropriate financial risk management strategy.Financial risk arises through countless transactions of a financial nature, including sales and purchases, investments and loans, and various other business activities. It can arise as a result of legal transactions, new projects, mergers and acquisitions, debt financing, the energy component of costs, or through the activities of management, stakeholders, competitors, foreign governments, or weather. When financial prices change dramatically, it can increase costs, reduce revenues, or otherwise adversely impact the profitability of an organization. Financial fluctuations may make it more difficult to plan and budget, price goods and services, and allocate capital.There are three main sources of financial risk:1. Financial risks arising from an organization’s exposure to changes in market prices, such as interest rates, exchange rates, and commodity prices.2. Financial risks arising from the actions of, and transactions with, other organizations such as vendors, customers, and counterparties in derivatives transactions3. Financial risks resulting from internal actions or failures of the organization, particularly people, processes, and systemsFinancial risk management is a process to deal with the uncertainties resulting from financial markets. It involves assessing the financial risks facing an organization and developing management strategies consistent withinternal priorities and policies. Addressing financial risks proactively may provide an organization with a competitive advantage. It also ensures that management, operational staff, stakeholders, and the board of directors are in agreement on key issues of risk.Managing financial risk necessitates making organizational decisions about risks that are acceptable versus those that are not. The passive strategy of taking no action is the acceptance of all risks by default.Organizations manage financial risk using a variety of strategies and products. It is important to understand how these products and strategies work to reduce risk within the context of the organization’s risk tolerance and objectives.Strategies for risk management often involve derivatives. Derivatives are traded widely among financial institutions and on organized exchanges. The value of derivatives contracts, such as futures, forwards, options, and swaps, is derived from the price of the underlying asset. Derivatives trade on interest rates, exchange rates, commodities, equity and fixed income securities, credit, and even weather.The products and strategies used by market participants to manage financial risk are the same ones used by speculators to increase leverage and risk. Although it can be argued that widespread use of derivatives increases risk, the existence of derivatives enables those who wish to reduce risk to pass it along to those who seek risk and its associated opportunities.The ability to estimate the likelihood of a financial loss is highly desirable. However, standard theories of probability often fail in the analysis of financial markets. Risks usually do not exist in isolation, and theinteractions of several exposures may have to be considered in developing an understanding of how financial risk arises. Sometimes, these interactions are difficult to forecast, since they ultimately depend on human behavior.The process of financial risk management is an ongoing one. Strategies need to be implemented and refined as the market and requirements change. Refinements may reflect changing expectations about market rates, changes to the business environment, or changing international political conditions, for example. In general, the process can be summarized as follows:1、Identify and prioritize key financial risks.2、Determine an appropriate level of risk tolerance.3、Implement risk management strategy in accordance with policy.4、Measure, report, monitor, and refine as needed.DiversificationFor many years, the riskiness of an asset was assessed based only on the variability of its returns. In contrast, modern portfolio theory considers not only an asset’s riskiness, but also its contribution to the overall riskiness of the portfolio to which it is added. Organizations may have an opportunity to reduce risk as a result of risk diversification.In portfolio management terms, the addition of individual components to a portfolio provides opportunities for diversification, within limits. A diversified portfolio contains assets whose returns are dissimilar, in other words, weakly or negatively correlated with one another. It is useful to think of the exposures of an organization as a portfolio and consider the impact of changes or additions on the potential risk of the total.Diversification is an important tool in managing financial risks.Diversification among counterparties may reduce the risk that unexpected events adversely impact the organization through defaults. Diversification among investment assets reduces the magnitude of loss if one issuer fails. Diversification of customers, suppliers, and financing sources reduces the possibility that an organization will have its business adversely affected by changes outside management’s control. Although the risk of loss still exists, diversification may reduce the opportunity for large adverse outcomes.Risk Management ProcessThe process of financial risk management comprises strategies that enable an organization to manage the risks associated with financial markets. Risk management is a dynamic process that should evolve with an organization and its business. It involves and impacts many parts of an organization including treasury, sales, marketing, legal, tax, commodity, and corporate finance.The risk management process involves both internal and external analysis. The first part of the process involves identifying and prioritizing the financial risks facing an organization and understanding their relevance. It may be necessary to examine the organization and its products, management, customers, suppliers, competitors, pricing, industry trends, balance sheet structure, and position in the industry. It is also necessary to consider stakeholders and their objectives and tolerance for risk.Once a clear understanding of the risks emerges, appropriate strategies can be implemented in conjunction with risk management policy. For example, it might be possible to change where and how business is done, thereby reducing the organization’s exposure and risk. Alternatively, existingexposures may be managed with derivatives. Another strategy for managing risk is to accept all risks and the possibility of losses.There are three broad alternatives for managing risk:1. Do nothing and actively, or passively by default, accept all risks.2. Hedge a portion of exposures by determining which exposures can and should be hedged.3. Hedge all exposures possible.Measurement and reporting of risks provides decision makers with information to execute decisions and monitor outcomes, both before and after strategies are taken to mitigate them. Since the risk management process is ongoing, reporting and feedback can be used to refine the system by modifying or improving strategies.An active decision-making process is an important component of risk management. Decisions about potential loss and risk reduction provide a forum for discussion of important issues and the varying perspectives of stakeholders.Factors that Impact Financial Rates and PricesFinancial rates and prices are affected by a number of factors. It is essential to understand the factors that impact markets because those factors, in turn, impact the potential risk of an organization.Factors that Affect Interest RatesInterest rates are a key component in many market prices and an important economic barometer. They are comprised of the real rate plus a component for expected inflation, since inflation reduces the purchasing power of a lender’s assets .The greater the term to maturity, the greater theuncertainty. Interest rates are also reflective of supply and demand for funds and credit risk.Interest rates are particularly important to companies and governments because they are the key ingredient in the cost of capital. Most companies and governments require debt financing for expansion and capital projects. When interest rates increase, the impact can be significant on borrowers. Interest rates also affect prices in other financial markets, so their impact is far-reaching.Other components to the interest rate may include a risk premium to reflect the creditworthiness of a borrower. For example, the threat of political or sovereign risk can cause interest rates to rise, sometimes substantially, as investors demand additional compensation for the increased risk of default.Factors that influence the level of market interest rates include:1、Expected levels of inflation2、General economic conditions3、Monetary policy and the stance of the central bank4、Foreign exchange market activity5、Foreign investor demand for debt securities6、Levels of sovereign debt outstanding7、Financial and political stabilityYield CurveThe yield curve is a graphical representation of yields for a range of terms to maturity. For example, a yield curve might illustrate yields for maturity from one day (overnight) to 30-year terms. Typically, the rates are zero coupon government rates.Since current interest rates reflect expectations, the yield curve provides useful information about the market’s expectations of future interest rates. Implied interest rates for forward-starting terms can be calculated using the information in the yield curve. For example, using rates for one- and two-year maturities, the expected one-year interest rate beginning in one year’s time can be determined.The shape of the yield curve is widely analyzed and monitored by market participants. As a gauge of expectations, it is often considered to be a predictor of future economic activity and may provide signals of a pending change in economic fundamentals.The yield curve normally slopes upward with a positive slope, as lenders/investors demand higher rates from borrowers for longer lending terms. Since the chance of a borrower default increases with term to maturity, lenders demand to be compensated accordingly.Interest rates that make up the yield curve are also affected by the expected rate of inflation. Investors demand at least the expected rate of inflation from borrowers, in addition to lending and risk components. If investors expect future inflation to be higher, they will demand greater premiums for longer terms to compensate for this uncertainty. As a result, the longer the term, the higher the interest rate (all else being equal), resulting in an upward-sloping yield curve.Occasionally, the demand for short-term funds increases substantially, and short-term interest rates may rise above the level of longer term interest rates. This results in an inversion of the yield curve and a downward slope to its appearance. The high cost of short-term funds detracts from gains that would otherwise be obtained through investment and expansion and make the economyvulnerable to slowdown or recession. Eventually, rising interest rates slow the demand for both short-term and long-term funds. A decline in all rates and a return to a normal curve may occur as a result of the slowdown.尽管近年来金融风险大大增加，但风险和风险管理不是当代的主要问题。

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文献信息：文献标题：Financial Risk Disclosure: Evidence from Albanian and Italian Companies（财务风险披露：阿尔巴尼亚和意大利公司的证据）国外作者：Grazia Dicuonzo, Antonio Fusco, Vittorio Dell’Atti文献出处：《KnE Social Sciences》,2017,1(2):182-196字数统计：英文4819单词，2734字符；中文15451汉字外文文献：Financial Risk Disclosure:Evidence from Albanian and Italian Companies Abstract In recent years standard setters, regulators and professional bodies worldwide have shown an increased interest in risk reporting. This has reflected the fallacy of the fina ncial reporting model to communicate a company’s risk profile, the recent scandals and the financial crisis. The European Union, the International Accounting Standards Board (IASB) and other national standard setters have introduced specific requirements in order to impose companies to highlight the principal financial risks and uncertainties that they face. The idea is that high-quality risk disclosure help investors and other market participants in their decision-making process, by providing a better understanding of the risk exposures and risk management practices of companies.Previous studies show large heterogeneity in risk reporting within individual countries and identify size as key determinant of risk disclosure. A few researches propose a cross-country investigation of risk reporting and to date there is a lack of evidence about companies operating in Southern Europe, especially in the Balkans.The aim of this study is twofold. First, we fill this gap by analyzing risk reporting regulations in Albania and in Italy to examine the different requirements. Second, we examine risk information disclosed by a sample of 12 Albanian companies and 12Italian companies within their annual reports, using content analysis. Due to small sample size we offer preliminary findings about financial risk disclosure. The results show that on average Albanian companies disclose less information on financial risk than Italian companies. Different explanations can be given for this evidence: i) risk disclosure regulation is less incisive in Albania, because it is limited to inform investors about the relevance of financial instruments and the terms and conditions of loans; ii) Albanian companies have fewer incentives to disclose risk information than Italian companies.Keywords: Financial risk disclosure, risk reporting, risk disclosure, content analysis, cross-country investigation1. IntroductionIn recent years risk reporting has received increasing attention by standard setters, regulators and professional bodies worldwide. Since 2007, listed companies must report the exposure, the objectives and the processes for managing financial risks (IFRS 7). Similarly, the Financial Stability Board (FSB) has developed new guidelines to improve risk reporting. This interest reflects the fallacy of the financial reporting model to communicate company’s risk profile, the recent scandals and the 2007-2009 financial crisis.The objective of this study is to provide further empirical evidence about the financial risk reporting practices in Albania and in Italy and key factors that influence risk disclosure decisions.The extant literature focuses on: i) the level of compliance with ad hoc standard about market risk; ii) the impact of risk disclosure on decision making; iii) the determinants of mandatory financial risk reporting practices. A few of prior researches focused on cross-country investigation, but they are limited to U.S., Canadian, UK and German settings. This study contributes to fill the gaps by exploring the differences between Albanian and Italian financial risk reporting. This paper proceeds as follows. Section 2 goes on to describe risk disclosure regulations. Section 3 reviews the literature related torisk reporting practices. Section 4 provides details onresearch design. Section 5 describes the main findings, while Section 6 details the conclusions.2. Albanian and Italian Risk Disclosure RegulationsThe increased importance of risk information has led financial accounting bodies and national legislators to enhance and improve risk reporting requirements. In the last decade a gradual transition from voluntary risk disclosure to mandatory risk disclosure has been observed, in response to request of investors and users of financial statements. This change concerned the majority of European countries even if it is adopted in different ways and times.In this paragraph we examine the regulatory developments about risk reporting in Albania and in Italy. To understand the differences on mandatory risk disclosure we offer a preliminary brief overview about the two accounting systems.AlbaniaThe first step of Albania for the development of an accounting framework right after the starting of the transition period is represented by the issue of Law No. 7661 “On accounting”, entered into force the 1st January 1993. This law establishes the rules, the principles and the procedures to draw up the Financial Statement of all companies in Albania.The financial report recommended by Law No. 7661 consists in Balance Sheet, Comprehensive Income Statement and Summary Notes and all of them must be considered and drafted as a unique and inseparable element. At the beginning no specific format was required but only a minimum of elements of financial report indicated by the law. Even if the law provided for a chart of accounts, the Minister of Finance enabled operators to use the Annual Fiscal format report.It can be stated that the introduction of this first accounting law was forced by the opening to the market economy and the starting of the first private entrepreneurship and it was still influenced by the old accounting practices.The framework produced few transparency and it was inconsistent with Albanian Company Law. In order to enhance foreign investment and to respond to EuropeanUnion struggles to increase the accounting harmonization, Albanian government issued Law No. 9228 “on Accounting”in 2004, which is still into force.The Law of 2004 also identifies the National Council of Accounting (NCA) as an independent public professional body with legal entity, which is first of all required to develop national accounting standards.The main impact on Albanian accounting framework is the introduction and approval of National Accounting Standards (NAS, or SKK in Albanian language) by the NCA. They were written taking IAS/IFRS as example and result compliant with them. They entered into force in 2008 and the first financial reports written consistently with the new standards have been issued in 2009.Even if the introduction of Standards compliant with IAS/IFRS improved Albanian accounting practices, Albanian financial reports are still considered to be on a poor quality level. The only sector which issues a higher level of reports is the Banking sector: the reason is the affiliation of Albanian banks to European groups which force to adopt a standard accounting practice. Moreover, the affiliation to foreign groups produces the import of higher qualified staff than average Albanian accountants because of a longer accounting tradition. Furthermore, Bank of Albania carries out an important work in the improvement of accounting level. Poor quality of other sectors’firm mainly derives from the absence of information request from third parties, the lack of interest of the Authority to ask for “best practices”and the lack of experienced administrative staff. As a demonstration of the poor quality of financial reports, banks don’t consider Annual Reports so important to investigate loan applicant’s financial conditions.Regarding risk disclosure, the only requirements by NAS are included in Standard No. 3, which in paragraph 37 states that entities must indicate policies used in evaluating financial instruments and other information regarding financial instruments in order to improve financial statement’s comprehension. Paragraph 39, in the end, requires that entities must disclose all the information which enables users to evaluate financial instrument in place relevance and their characteristics.Albanian framework doesn’t require more disclosure for financial risk and the Authority did not prepare any best practice regarding this particular aspect of accounting.ItalyIn Italy we can identify three stages that have characterized the regulatory changes in risk reporting. Before 2005 disclosure was fundamentally voluntary because firm had discretion to choose which information regarding risks had to be communicated. It was generically required to describe the trend of the management, which could consist also in a risk disclosure. A study run in the period 2000-2003 shows high variability in risk disclosure policies, in respect of industry and firm size. The main factor was the absence of regulation regarding risk disclosure.The second stage (2005-2007) shows an increase in financial risk mandatory disclosure requirements.Through Legislative Decree 394/2003 the Italian system adopted Directive 2001/65/EC regarding fair value of financial instrument evaluation.In order to illustrate the new requirements, Italian standard setter (Organismo Italiano di Contabilità, OIC) issued Standard No. 3 “Information about financial instruments to be disclosed in Supplementary Notes and Management Report”in March 2006. Through this document, the standard setter clarifies fair value evaluation and gives exemplifications regarding derivatives’evaluation. OIC 3, like IFRS 7, divides risk into the following categories: market risk, credit risk, liquidity risk and other price risk.From the above, it is evident that in the period taken into consideration financial risk disclosure became mandatory while non-financial risk disclosure remained voluntary.The third stage started in 2007 with the amendment of article 2428 Civil Code by the Legislative Decree 32/2007. This Decree has been adopted as mandatory content of Direc tive 2003/51/EC, also known as “Accounts Modernization Directive”. The new regulations state that Management Report must present “an accurate, balanced and exhausting analysis of the firm’s financial situation and management trends andresults” (…) “and al so a description of main risks and uncertainties to which the firm is exposed”. It is also specified that this analysis must be “consistent with entity and complexity of firm’s business” and include “the necessary financial indicators to understand the financial situation of the company, its trend and its results and, if necessary, non-financial indicators relevant to the specific business, human resources and environment”. Therefore the legal framework now consists not only in financial risk mandatory disclosure but also in cogent system which involves all risk categories that could affect the firm.3. Literature ReviewThe growth of the risk disclosure’s demand from the financial market represents an incentive for academics and practitioners’ associations to investigate risk reporting. Starting from the nineties, the literature examined the need of information to improve risk disclosure quality. It has been revealed that through the analysis of firm risk communication’s best practices it is possible to ass ess the relevance of this kind of corporate disclosure.Literature contribution consists in the analysis of risk factors communicated by the companies. The present work pays attention to the empirical researches which showed the risk disclosure’s policies and the limits of annual report disclosure in the absence of a common legal framework. In order to evaluate informative contents of risk disclosure, some Authors observed the nature (qualitative or quantitative), the dimension (financial or non-financial), the timeframe (past, present or prospective) and the impact (positive or negative) of each information released and communicated to the market. This analysis allows to assess both the existing reporting model and the variability of the information disclosed by firms. Currently, many works investigate the generic risk disclosure practiceswhile some investigate financial risk disclosure or particular categories of financial risks.In conclusion, the results of the different works made at international level show that risk disclosure practices are still inadequate. Most of the information disclosed is qualitative and generic and it turns to be un-useful for financial statements users, whoprefer information regarding future events’impact on the firm’s economy instead of what happened in the past. Some surveys made on investors and analysts sample show a limited appreciation about the risk reporting practices, so the improvement of risk disclosure’s model is necessary (CFA Institute).Given the regulatory background and the gaps in empirical previous studies on financial risk disclosure in Southern Europe, our paper aims at providing a preliminary analysis on risk reporting practices in Albania and in Italy. Our expectations are that Italian companies disclose more information about financial risk than Albanian companies.4. Research Design4.1. Sample SelectionTo conduct our research, we analyse annual financial reports of Albanian companies and we compare them with Italian companies’ financial reports. Because of the lack of an organic list of entities operating in Albania and the difficulties to find financial statements useful for our research, we use a small size sample, constructed as following.In the beginning, the sample consisted in 70 Albanian entities, selected among affiliated to Italian-Albanian Chamber of Commerce. Their financial reports have been collected from the National Registration Centre, in which the entities are obliged to deposit, among other documents, their annual reports. From the initial 70 entities sample, we excluded: i) 19 associations or tax and legal services; ii) 12 companies with 2014 financial reports missing; iii) 2 financial companies and other 2 IAS/IFRS adopters; and iv) 23 companies with narrative information missing. Therefore, the sample of Albanian companies consists in 12 non-financial companies using NAS (SKK in Albanian language).After the selection of Albanian companies, a symmetrical sample of Italian companies using national accounting standards (OIC) has been constructed. We chose Italian firms considering the same industry and the similar size of the companies from Albania.The final sample is composed of 12 Albanian firms using NAS and 12 Italian firms using OIC.4.2. Method of analysisTo examine and classify financial risks disclosure within the Albanian and Italian annual reports we use content analysis. This approach has been widely adopted in previous studies on narrative disclosure. Content analysis is defined as “a research technique for making replicable and valid inferences from texts (or other meaningful matter) to the contexts of their use”. According to the extant literature, a single coder performed the content analysis to ensure reliability. Financial risk information is examined in the supplementary notes and in the management reports. We consider the sentence as recording unit and we classify risk information in these seven categories:1.financial risk management;2.credit risk;3.liquidity risk;4.price risk;5.interest rate risk;6.currencyrisk;7.other financial risk (as a residual category).This analysis captures three attributes of each sentence:1.time orientation: past, present or no-time specific, forward-looking;2.type: quantitative, qualitative;3.nature: good news, bad news, neutral news.5. Findings and DiscussionIn this section we examine how Albanian and Italian companies disclose relevant information about their financial risk exposure. A total of 44 sentences were identified within the Albanian sample, whereas we found a total of 124 sentences within the Italian sample. As shown in table 6, Albanian companies disclose on average 4 sentences about financial risk, while Italian companies disclose 10 sentences. This evidence con-firms our expectations about the predominance of financial riskdisclosure in Italy. Our explanation for this difference is that Italian companies have more incentives to disclose risk information.As regards risk categories, we can observe that Albanian firms disclose mostly other financial risk (75%). Examining their annual reports, we find that these risks arise mainly from tax regulation or litigation problems, factors that can affect negatively the financial position. Information about financial risk management (5%), credit risk (2%), liquidity risk (2%) and currency risk (5%) appears less important for Albanian firms. Some information is provided to users of financial statements regarding interest rate risk (11%).Italian companies disclose mainly information about credit risk (32%) and liquidity r isk (21%), in line with users’ expectations, as revealed by a survey (CFA Institute, 2011). The other risk categoriesare disclosed on average from 10% (price risk) to 13% (interest rate risk).One possible explanation for these differences is probably linked to the regulatory environment and accounting standards. Italy has a more pervasive legislation about financial risk disclosure, similar to IFRS 7, than Albania.6. ConclusionsThis paper is a first financial risk disclosure study that compares two Southern Europe countries. Based on a content analysis of annual reports of a matched-sample of 24 firms from Albania and Italy, we provide evidence on the individual-country and the cross-country levels.We find a prevalence of present (or no-time specific) and of qualitative risk disclosure. Forward-looking information is missing in Italian reports, while Albanian firms provide some details on the future, especially about the possible impact of tax regulation. Descriptive cross-country statistics suggest heterogeneity in risk disclosure quantity. Italian firms provide more risk disclosure than Albanian firms. This finding is consistent with more strict regulation imposed by Legislative Decree 32/2007.Our study is subject to limitations. Firstly, we examine a limited sample size of Albanian and Italian companies due to a difficulty to find published Albanian annualreports. Secondly, we analyse only the quantity of disclosure and we do not provide evidence on the quality of disclosure.中文译文：财务风险披露：阿尔巴尼亚和意大利公司的证据摘要近年来，全球标准制定者、监管机构和专业机构对风险报告的兴趣日益增强。