A deforming time approach to the treatment of risk in projects evaluation

Salvador Cruz-Rambaud and Ana Maria Sanchez-Perez
Authors registered in the RePEc Author Service: Salvador Cruz Rambaud, Sr.

Journal of Risk Finance, 2018, vol. 19, issue 5, 548-563

Abstract: Purpose - The purpose of the paper is to introduce a novel methodology to identify and quantify the difference of financial risks exhibited by listed and unlisted companies in their debt payments from an empirical point of view. Design/methodology/approach - The paper attempts to establish the theoretical relationship between the agreed original periods and their corresponding periods of real payments. It is based on Krugman’s curve. This relationship has been implemented using data from listed and unlisted companies of Spain and from Western Europe countries (divided by companies, size and industry). Findings - An alternative model has been implemented with the available information about listed and unlisted companies. There is not a significant difference in the financial risk level corresponding to listed and unlisted firms in Spain. Practical/implications - The paper could provide a useful guidance in applying the risk in project assessment. Originality/value - This paper provides a new methodology to reduce the subjectivity shown in the treatment of risk by traditional approaches. The method allows to including the financial risk in the time parameter of the discount function. Analysis of the delays in debt payments by both listed and unlisted companies; Alternative model able to describe the expected delays from the initial agreed period; Inclusion of the financial risk in the parameter “time” of a discount function.

Keywords: Delay; Financial risk; Debt payment; Listed company; Unlisted company; Krugman’s curve (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jrfpps:jrf-11-2017-0175

DOI: 10.1108/JRF-11-2017-0175

Access Statistics for this article

Journal of Risk Finance is currently edited by Nawazish Mirza

More articles in Journal of Risk Finance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().