Faculty of Actuarial Science & Insurance Seminar with Ahmed Barakat - Nottingham University
Title of the talk:
Operational Risk and Reputation in Financial Institutions: Does Media Tone Make a Difference?
Abstract of the talk:
Operational risk announcements are unexpected adverse media news that potentially harm the reputation of financial institutions. This paper examines the equity-based and debt-based reputational effects of financial sentiment tones in operational risk announcements and shows how such reputational effects are moderated by alternative sources of public information. Our analysis reveals that the net negative tone and litigious tone have adverse reputational effects, and the uncertainty tone mitigates the adverse reputational impact. Additionally, alternative, simultaneous sources of information neutralize the reputational effects of textual tones. First, third-party information about the event (i.e. regulatory announcements and final settlements) dissolves the favorable (adverse) reputational impact of the uncertainty tone (litigious tone). Second, loss amount disclosure and firm recognition substitute the reputational effects of the net negative tone and uncertainty tone only in Anglo-Saxon countries and market-based economies. Overall, our findings indicate that the reputational effects of the media materialize most when there is lack of certain, quantifiable and regulated public information about the operational risk event.
Cass Business School, 106 Bunhill Row
106 Bunhill Row, London EC1Y 8TZ, Great Britain (UK)
Dr Ahmed Barakat is an Assistant Professor in Banking at Nottingham University Business School. He has written several research papers on risk management, corporate governance, banking, insurance and financial reporting quality which are published in high quality international academic journals such as Journal of Banking and Finance and International Review of Financial Analysis. He also serves as a referee for several reputable academic journals such as International Journal of Accounting, Corporate Governance: An International Review and Journal of Risk Research. He teaches undergraduate and postgraduate modules as well as supervises MSc dissertations, MBA projects and PhD theses in risk management, corporate governance, financial institutions, accounting and auditing. He has well-established experience in designing and delivering executive training courses and providing professional financial consultancy to international organisations in Europe and the Gulf area.