Operational risk and reputation in the financial industry

Roland Gillet, Georges Hübner and Séverine Plunus

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: By examining stock market reactions to the announcement of operational losses by financial companies, this paper attempts to disentangle operational losses from reputational damage. Our analysis deals with 154 events coming from the FIRST database of OpVantage. Events occurred between 1990 and 2004 in companies belonging to the financial sector and that are listed on the major European and US Stock Exchanges. Results show significant, negative abnormal returns at the announcement date of the loss, along with an increase in the volumes of trade. In cases of internal fraud, the loss in market value is greater that the operational loss amount announced, which is interpreted as a sign of reputational damage. Negative impact is proportionally greater when the loss amount represents a larger share in the company's net profit. © 2009 Elsevier B.V. All rights reserved.

Keywords: Event study; Operational risk; Reputational risk (search for similar items in EconPapers)
Date: 2010-01
Note: SCOPUS: ar.j
References: Add references at CitEc
Citations: View citations in EconPapers (60)

Published in: Journal of banking & finance (2010) v.34 n° 1,p.224-235

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Operational risk and reputation in the financial industry (2010)
Working Paper: Operational risk and reputation in the financial industry (2010)
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:ulb:ulbeco:2013/142646

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/142646

Access Statistics for this paper

More papers in ULB Institutional Repository from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().