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Best Paper Award for Research Shows Value of Risk Disclosure in Weathering Currency Shock

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Wharton Research Data Services (WRDS), the leading data research platform and business intelligence tool for corporate, academic and government institutions worldwide, is pleased to announce Luzi Hail, Professor of Accounting at the Wharton School of the University of Pennsylvania, David Oesch, Professor of Financial Accounting at the University of Zurich and Maximilian Muhn, Ph.D. candidate at Humboldt University of Berlin as winners of the WRDS Best Paper Award at the 2018 EFMA Conference held in Milan, Italy, for their paper, Do Risk Disclosures Matter When It Counts? Evidence from the Swiss Franc Shock.

The award-winning paper examines whether company risk disclosures help market participants to better interpret sudden changes in firms economic fundamentals. Using the unexpected unpegging of the Swiss franc from the Euro by the Swiss National Bank in 2015 as their test event, Hail, Oesch and Muhn find that firms with better risk disclosures experience less of an increase in uncertainty around the economic shock. They find a gap in bid-ask spreads between more and less transparent firms that appears within 30 minutes of the SNB announcement and persists for about two weeks before alternative information sources kick in. The researchers complement the results of the statistical tests by surveying financial analysts, credit officers of lending banks, and investor relations managers of firms affected by the currency shock.

Key points:

  • Past risk disclosures may become relevant again in light of unexpected news when markets need them the most.
  • Current regulatory initiatives to reduce disclosure requirements have to carefully assess future uses of the information.
  • The combination of empirical analysis using archival data with surveys and interviews of affected parties allows for unique insights.

For their paper, the researchers used archival data from Thomson Reuters Worldscope as well as hand-collected data from annual reports and the Swiss stock exchange.

WRDS is proud to present the WRDS Best Paper Award to Luzi, David and Maximilian for their terrific work exploring the connection between disclosures and firm resilience in the face of a substantial shock, said Robert Zarazowski, Managing Director of WRDS. This paper uses a novel approach resulting in important and impactful work.

We are truly grateful to WRDS for receiving this Best Paper Award, said Luzi Hail. Its a great honor to be selected out of more than 600 submissions and shows that our work has been well-received by our peers and is relevant beyond academia.

Along with best paper awards, research support and the latest data available, WRDS is a leader in enabling impactful research. Through a collaboration with SSRN, WRDS is elevating the visibility of universities and researchers working across an array of fields. The WRDS Research Paper Series is a searchable repository of all papers submitted to SSRN that cite WRDS in their work, which will increase researcher visibility and advance shared knowledge. In addition, the organizations have launched the WRDS-SSRN Innovation Award to honor emerging business schools in North America, Asia-Pacific, and EMEA. Learn more about how WRDS is driving impact >>

About WRDS

Wharton Research Data Services (WRDS) provides the leading business intelligence, data analytics, and research platform to global institutions ̶ enabling comprehensive thought leadership, historical analysis, and insight into the latest innovations in academic research.

WRDS provides researchers with one location to access over 350 terabytes of data across multiple disciplines including Accounting, Banking, Economics, ESG, Finance, Healthcare, Insurance, Marketing, and Statistics. Flexible data delivery options include a powerful web query method that reduces research time, the WRDS Cloud for executing research and strategy development, and the WRDS client server using PCSAS, Matlab, R and more. Our rigorous data review and validation give users the confidence to tailor research and create a wide range of reliable data models. WRDS unique array of Services offer access to a suite of analytics developed by our doctoral-level research team, tutorials, research support, and Classroom by WRDS — a teaching and learning toolkit designed to introduce business concepts in the classroom. The WRDS Experience is more than just a data platform.

WRDS is a leader in impactful research. Through a partnership with SSRN, WRDS is elevating the visibility of universities and researchers working across an array of fields. The WRDS Research Paper Series is a searchable repository of all papers submitted to SSRN that cite WRDS in their work. In addition, the two organizations have launched the WRDS-SSRN Innovation Award„¢ to honor emerging business schools in North America, Asia-Pacific, and EMEA.

An award-winning data research platform for 50,000+ commercial, academic, and government users in 35+ countries, WRDS is the global gold standard in data management, innovative tools, analytics, and research services ̶ all backed by the credibility and leadership of the Wharton School.

About the Wharton School

Founded in 1881 as the first collegiate business school, the Wharton School of the University of Pennsylvania is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. With a broad global community and one of the most published business school faculties, Wharton creates economic and social value around the world. The School has 5,000 undergraduate, MBA, executive MBA, and doctoral students; more than 9,000 participants in executive education programs annually and a powerful alumni network of 96,000 graduates.

Wharton Research Data Services
Robin Nussbaum Gold
wrds@wharton.upenn.edu

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