Article Review
The article has been written about managing risk with reference to the gold mining industry in the United States of America and Canada. Over here, the writer first mentions that while most firms do not like to divulge their risk management processes, the firms which are dealing in the gold mining sector would rather disclose their risk management process. He further justifies this to be one of the key reasons for this research as he would get access to recent and accurate data and thereby would be able to conduct an empirical analysis. Also the author gets an opportunity to observe the financial risk management tasks and strategies employed by such organizations.
The article has given us vast insight into the risk management activities that are undertaken by gold mining firms. The next part of the article lays down the foundation for the literature review wherein various corporate risk theories are analysed and their relevance to the gold mining market is assessed. The next section is an analysis to find out the relationship between the traits of such gold mining organizations and the financial risk management exercises undertaken by such firms. Then the author discusses certain managerial attributes and the manner in which risk is managed in such firms. Lastly, the author discusses the theoretical implications for conducting this academic study and also provides further recommendations and paves the way for further research in this domain (Tufano, 1996).
It can be observed that the author has carried out extensive research on the subject and has looked up various risk management data available on the gold mining firms operating in the United States of America and Canada (Tufano, 1996). Moreover, such data has been gathered and has been displayed by means of tables so that it is easier for the reader to get a better insight about the writer’s opinion. On the basis of the data gathered, the author has conducted certain statistical analysis like mean, median and standard deviation to provide conclusive reasons and arguments.
The hypothetical assumptions were drawn based on the traits displayed by the gold mining firms and the extent of risk management tasks undertaken by such organizations. Accordingly corporate risk management theories like managerial utility maximization hypothesis and shareholder maximization hypothesis and alternatives to risk management theories like controls were examined (Tufano, 1996).
Based on the data garnered and the theories examined, the author has lucidly made the research methodology which has used a tobit model and multivariate analysis for examining data (Tufano, 1996). Also the managerial attributes described by the author provides us a vast insight into the risk management activities which is akin to this sector only.
Based on the various theories and the research methodology undertaken, the writer makes some inferences which are logical and relevant to the study of risk management with respect to the gold mining industry. In fact, it has been observed that the characteristics displayed by managers and organizations both influences the risk management activities carried out in the gold mining industry.
Reference
Tufano, P. (1996). Who manages risk? An empirical examination of risk management practices in the gold mining industry. The Journal of Finance, 51(4), 1097 – 1137.
