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Essays on the effective integration of risk management with operations management decisionsTanriseve, Fehmi 04 May 2015 (has links)
In today's marketplace, firms' exposure to business uncertainties and risks are continuously increasing as they strive to meet dynamically changing customer needs under intensifying competitive pressures. Consequently, modern supply chains are continuously evolving to effectively manage these uncertainties and the allied risks through both operational and financial hedging strategies. In practice, firms extensively use operational hedging strategies such as operational flexibility, capacity flexibility, postponement, multi-sourcing, supplier diversification, component commonality, substitutability, transshipments and holding excess stocks as operational means for risk management. On the other hand, financial hedging which involves buying and selling financial instruments, carrying large cash reserves or adopting conservative financial policies, changes the cash flow stream of the firms and may help to reduce the firms exposure to business risks and uncertainties. Overall, in this dissertation we explore how risk management can be integrated with operating decisions so as to improve the firm value creating more wealth for the shareholders. In the first essay, we focus on capacity flexibility as a means of operational hedging for risk management in an MTO production environment under demand uncertainty. We demonstrate that capacity flexibility may not only be used to hedge against the demand uncertainty, but may also be employed to effectively protect against possible suboptimal operating decisions in the future. In the second essay, we focus on operational hedging in financially constrained startup firms when making short-term production and long-term investment decisions. We provide an analytical characterization of the optimal investment and operating decisions and analyze the impact of market parameters on the operations of the firm. Our findings highlight an interesting operational hedging behavior between the process investment decisions and the short-term production commitments of the firm when they are faced with financial constraints. Our third essay focuses on the value of integrated financial risk management activities by publicly traded established firms under the risk of incurring financial distress cost. Different from the existing operations management literature, we study the risk management by a public corporation within the value framework of finance; hence our findings do not require any specific assumptions about the investors' utility functions. Moreover, we contribute to the operations management research by examining the impact of the costs of financial distress on hedging and operating plans of the firm. Overall, in this dissertation, we examine the effective integration of operational and financial risk management so as to improve the firm value creating more wealth for the shareholders. / text
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Earnings Management for Swedish Listed Firms : An Empirical Study on Real Earnings Management Prior to Stock RepurchasesLardner, Simon, Willner, Pierre January 2017 (has links)
In this study, we follow Cooper et al. (2017) and intend to further investigate income-decreasing real earnings management through altering production and discretionary expenditure and focus on such actions taken by management prior to stock repurchase. We take on a European perspective of IFRS on real earnings management and empirically test to what extent Swedish listed firms use real earnings management prior to stock repurchases to lower share prices. We follow Roydchowdhury (2006) and Cooper et al. (2017) and establish the firms normal level of real earnings management to compare with the period when firms anticipate stock repurchases. We present our data and results through descriptive statistics and use variables identified by Zang (2011) to perform correlation and regression tests accordingly with Cooper et al. (2017). Our results suggest that managers of Swedish firms on average engage in income-increasing real earnings management and decrease such management actions prior to stock repurchases. These findings emphasize the influence of real operating decisions by firms’ that must be considered by the market around major corporate events similar to repurchasing stock.
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