Michelle Liao
Pronouns: She/her
Research Mentor(s): Yue Zhou
Research Mentor School/College/Department: Strategy / Business
Program:
Authors: Catherine Magelssen, Yue Maggie Zhou
Session: Session 6: 3:40 pm – 4:30 pm
Poster: 77
Abstract
Firms often enter into contracts as a result of everyday business interactions, and previous studies have explored these contracts as a risk management device and aspect of company life. Our research continues the discussion of risk in business contracts, exploring how companies bear risk through contracts of all subjects, ranging from supply to intellectual property agreements. We examine when firms decide to share or bear all the risk and how that differs based on the type of contract involved. How do firms bear risk if something goes wrong? Which party is responsible, and who ends up paying the cost at different points in time? Also, how does this differ internally versus externally? We coded 563 contracts from proprietary data, SEC filings, and LawInsider databases involving multinational firms based on the risk to which they refer and the party that bears the said risk. We then conducted a statistical analysis to determine a pattern among the data. While the analysis has not been concluded, we aim to find a relationship between the parties that bear risks based on risk and transaction type and the extent to which they bear it. The results from this research provide insight into how companies make business decisions and explore more effective ways to distribute risk within and between organizations.
