Date of Award
Doctor of Philosophy (PhD)
Jayant Kale - Chair
Roy Arthur Wiggins
I investigate the relation between firm risk and firm transparency over the period 1992-2006 and find that the level of firm transparency and the level of firm risk are negatively related. I also find that higher CEO pay-performance sensitivity (delta) works to mitigate this inverse relationship. This result is consistent with Hermalin and Weisbach (2007) who suggest that managers reduce risk to protect their pay and performance evaluations under higher levels of firm transparency. I further find that firms in high technology industries are more likely to increase risk relative to firms in other industries when transparency is high. Finally, I develop an additional proxy for transparency based on the Standard and Poor’s Transparency and Disclosure Score. Results using this proxy are generally consistent with my findings that there is an inverse relationship between risk and transparency and that CEO pay-performance sensitivity lessens this relationship.
Pennywell, Gwendolyn, "Transparency, Risk, and Managerial Actions" (2009). Finance Dissertations. Paper 17.