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Corporate risks, risk bearing ability and equity

Handschin, Lukas. (2011) Corporate risks, risk bearing ability and equity. European business law review, 22 (2). pp. 189-210.

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Abstract

There is a relation between corporate risks, risk bearing ability and equity. In order to assess the risk bearing ability of a corporation, one reference figure is equity, understood as the sum of legal capital and reserves, free reserves and accrued profits. Equity shows the risk bearing ability related to the risk of asset reduction as well as the ability of the corporation to attract new liquidity by increasing debts, in case of a negative free cash flow. Equity is the risk reserve of the corporation. The relation between equity and risk bearing ability allows defining the necessary amount of equity by analyzing the corporate risks. Furthermore, it leads to rules for the valuation of assets, the creation of reserves and as to the board’s duty of care on how to pursue the corporate strategy.
Faculties and Departments:02 Faculty of Law > Departement Rechtswissenschaften > Fachbereich Privatrecht > Ordinariat Privatrecht, insb. Gesellschafts- und Rechnungslegungsrecht (Handschin)
UniBasel Contributors:Handschin, Lukas C.
Item Type:Article, refereed
Article Subtype:Research Article
Bibsysno:Link to catalogue
Publisher:Kluwer Law International
ISSN:0959-6941
Note:Publication type according to Uni Basel Research Database: Journal article
Language:English
Related URLs:
Identification Number:
  • other: EULR2011009
Last Modified:29 Jul 2016 07:25
Deposited On:14 Sep 2012 07:02

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