1. Page 1 Recording of this session via any media type is strictly prohibited. Page 1 An Empirical Analysis of ERM and Reputation

2. Page 2 Recording of this session via any media type is strictly prohibited. Presenters Dr. Paul L. Walker St. John’s University Dr. David M. Pooser St. John’s University

3. Page 3 Recording of this session via any media type is strictly prohibited. RESEARCH QUESTIONS Does ERM influence the reputational value of the firm? Which financial factors impact a firm’s reputational value? How might our results affect future research in this area?

4. Page 4 Recording of this session via any media type is strictly prohibited. DATA PROCESS We received data from Steel City Re, RIMS (through LogicManager), and matched the data to annual financial data through Compustat The RIMS data contained survey responses to a risk management maturity (RMM) survey About 1974 initial observations Initial cleaning reduced the set to roughly 1550 observations Steel City Re’s match produced 339 firms with 389 observations We merged the Steel City Re reputational data, RIMS RMM data, and Compustat annual financial data to create a dataset with 252 firms

5. Page 5 Recording of this session via any media type is strictly prohibited. THE RVM VARIABLE IN OUR STUDY RVM 1%-0.9793 25%0.4305 50%0.5637 75%0.7930 99%3.9781 Mean0.6770

6. Page 6 Recording of this session via any media type is strictly prohibited. PLOTTING THE RVM AND ERM SCORE

7. Page 7 Recording of this session via any media type is strictly prohibited. SUMMARY STATISTICS HIGH VS. LOW RVM RVM Quartile 1RVM Quartile 4 ERM Score768.93763.46 Opaque Assets16.76%14.13% Tobin's q0.97250.8731* Firm Assets7,86615,002* Market Value14,19627,076* Revenue Growth0.71%5.92%* Dividend Payer61.17%78.19%* ROE-4.72%3.71%* Earnings Variation0.34740.3652 Leverage5.23703.3689* Market Value Change5.68%1.45%* Slack / Liquidity13.38%11.26%

8. Page 8 Recording of this session via any media type is strictly prohibited. RVM VALUE FOR LOW AND HIGH FINANCIAL VARIABLE LEVELS RVM (Low)RVM (High) ERM Score0.66490.6890 Opaque Assets0.67800.6760 Tobin's q0.74080.6366* Firm Assets0.64610.7080 Market Value0.61330.7306* Revenue Growth0.64110.7131* Dividend Payer0.60400.6993* ROE0.56740.7840* Earnings Variation0.63240.7189* Leverage0.67650.6774 Market Value Change0.71520.6396* Slack / Liquidity0.72300.6318*

9. Page 9 Recording of this session via any media type is strictly prohibited. MULTIVARIATE REGRESSION ANALYSIS: ANALYZING THE RVM Coefficientp-value ERM Score-0.00030.035* Opaque Assets-0.58190.001* ERM*Opaque0.00020.005* Tobin's q-0.10500.002* Firm Assets0.01840.259 Revenue Growth0.07350.564 Dividend Payer0.07790.198 ROE-0.15850.300 Earnings Variation-0.01660.642 Leverage-0.02550.277 Market Value Change0.00910.866 Slack / Liquidity0.10020.625 R2R2 0.1112 F-Stat3.57<0.001*

10. Page 10 Recording of this session via any media type is strictly prohibited. Questions, Final Comments and Contact Information Dr. Paul L. Walker Schiro/Zurich Chair of ERM Executive Director, Center for Excellence in ERM St. John’s University walkerp@stjohns.edu (212) 284-7011 Dr. David Pooser Assistant Professor St. John’s University pooserd@stjohhns.edu (212) 284-7010