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ERICA Working Group

The ERICA WG has published a new “ERICA series” document: "The risk-return paradox after IFRS adoption by European listed groups"

This analysis tests the existence of the risk-return paradox in European listed non-financial groups after adoption of the IFRS and addresses its drivers using an up-to-date approach: cluster analysis. The risk-return paradox implies a negative association between corporate returns and risk. The results reveal that the higher-risk cluster tends to perform worse, while the lower-risk cluster performs better.