kaal:claim:1558614-021

Because U.S. companies historically financed themselves through markets rather than through each other, U.S. managers are less attuned to risks accumulating at other firms, a blind spot that mattered once swaps and other complex instruments made firms directly vulnerable to each other's conditions.

Historically, U.S. companies have relied on markets for financing more than they have relied on each other, meaning U.S. managers are perhaps less aware than they should be of the risks that are being incurred by companies other than their own.

Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010), III. Cultural Components of Risk Taking and Controlling Risk, p. 26
https://ssrn.com/abstract=1558614 · source PDF

Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614

• applies once counterparty exposure through swaps and complex instruments becomes significant

mechanismsupport: arguedfailure: counterparty risk blind spotfamily: systemic-risk-transmissionrisk-and-incentiveseconomicscompliance

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