Monica Marin: Can Risk Management Help Prevent Bankruptcy?

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Monica MarinCan Risk Management Help Prevent
Bankruptcy?

• Discussant
• Christian Thomann

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Main Findings

• Risk Management
• Lowers Risk of Bankruptcy
• Increases Distance to Default
• Decreases Asset Volatility
• Asset Volatility is Reduced if a Company starts
  to Manage Risks
• Other Findings
• Probability of Bankruptcy Decreases with Size
• Probability of Bankruptcy Increases with Leverage

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Questions

• How did the New-Economy Bubble Affect the
  Companies in the Dataset? M-to-B Ratios?
• 20 of Companies from the Communications Sector
• Most of the Bankruptcies occur 2000/01
• How do your Models on the Asset Volatility of
  Bankrupt and Non-bankrupt Firms Compare to the
  Literature?