Board structure and corporate risk taking in the UK financial sector

Akbar, Saeed; Kharabsheh, Buthiena; Poletti‐Hughes, Jannine; Shah, Syed Zulfiqar Ali

doi:10.1016/j.irfa.2017.02.001

Cited by 129 publications

(138 citation statements)

References 83 publications

(158 reference statements)

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“…Akbar et al (2017) elucidated that in developed markets with effective external governance mechanism such as the market for managerial control, CEOs with dual functions tend to be more risk-averse due to fear of failure and the consequential reputational damage. As result of this perceived conservative risk mind-set, there is inherent presumption that these CEOs instead of embarking on exploring the best possible alternative strategies that maximizes shareholders' value, often strive to just keep the corporate boat floating safely (Burton 2000).…”

Section: H₀: the Proportion Of Independent Non-executive Directors Ismentioning

confidence: 99%

“…Only recently have research paradigm shifted to the rudiments of corporate risk management which ordinarily ought to have been the central point of discuss going by the key premises of agency theory and existing corporate governance regulations (Li et al, 2013). The fall of colossus corporations like Enron and Lehman Brothers, resonated the far reaching implications that managerial recklessness without adequate board vigilance can exert on the overall firm survival as a going concern (Akbar et al, 2017;Lawal 2016). Investigations into some of these high profile corporate scandals have equally revealed excessive risk-taking as being instrumental in the events leading to the collapse of affected corporations (Jiraporn et al, 2015;Hutchinson et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

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Board Rudiments and the Executive Attitude Towards Corporate Risk-Taking

Lawal¹

2018

IJFR

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This paper examines the effect of key board distinctiveness on managerial risk-taking behaviour. Using a total sample of 121 firms made up of 1,166 corporate directors and 847 firm-year observations, the study finds robust evidence across the three stages of estimation that suggests power separation in terms of CEO non-duality is negatively associated with executive risk-taking due to enhanced board assertiveness and independence. Board size is inversely associated with the variability of market value measure both within and at inter-firm levels. With average board membership in the study sample made up of 10 directors, the study finds crucial empirical evidence that points to the key benefits of large board configuration including the social capital, diversity of thoughts, knowledge, and experience, effectiveness and vigilance which curtails executive entrenchment. In contrast, the paper records positive association between the presence of foreign directors and corporate risk-taking. Due to their wealth of experiences, foreign directors tend to have more strategic sense of purpose and are likely not to hesitate in taking appropriate risk decisions when it really matters. While the paper finds little evidence that suggests a within-firm positive relationship between board independence and managerial risky propensities, there was no evidence found to indicate that board quality and ethnic diversity affects corporate risk-taking.

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Section: H₀: the Proportion Of Independent Non-executive Directors Ismentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Board Rudiments and the Executive Attitude Towards Corporate Risk-Taking

Lawal¹

2018

IJFR

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“…On the contrary, more synchronous stock price movements are related to worse transparency and weaker corporate governance, especially in emerging markets (Morck et al 2000). For instance, the financial crisis of 2007-2009 was the result of weakness in the corporate governance mechanisms in many countries (Akbar et al 2017). Johnson et al (2000) also emphasize that the weakness of legal institutions regulating corporate governance in most emerging markets caused stock market declines during the 1997 Asian financial crisis.…”

Section: Introductionmentioning

confidence: 99%

The monitoring role of nonexecutive directors in Vietnam from a return-volatility perspective

Tuan

Siem

et al. 2020

EKON ANAL

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This study examines the relevance of board independence to stock return volatility for a sample of 160 companies listed on the Vietnamese stock market over ten years (2008-2017). After controlling for potential endogeneity, we find that the presence of non-executive directors on the board tends to increase firm risk. The results indicate that non-executive directors do not play a supervisory role under the agency theory. Our findings remain robust when we apply alternative measures of the dependent variable.

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“…Effective independent board will increase the company value (Khosa, 2017). The presence of nonexecutive directors in corporate boards reduces corporate risk taking practices in financial firms (Akbar et al, 2017).…”

Section: Introductionmentioning

confidence: 99%

A Study of Corporate Governance Structure, Disclosure and Information Asymmetry in Indonesia Banking Industry

Sihombing

Pangaribuan

2017

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Abstract:The purposes of this study are to find out the effect of corporate governance structure on information asymmetry, to find out the effect of corporate governance structure on disclosure, and to find out the effect of disclosure on information asymmetry in Indonesia banking industry. This study used partial least square/ variance based statistical method. The results of this study found out that good implementation of corporate governance structure will increase disclosure in Indonesia banking industry. The other result implied that the higher implementation disclosure will reduce information asymmetry in Indonesia banking industry (disclosure represented by the indicator of percentage corporate governance items disclosed or as IPCG).

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Board structure and corporate risk taking in the UK financial sector

Cited by 129 publications

References 83 publications

Board Rudiments and the Executive Attitude Towards Corporate Risk-Taking

Board Rudiments and the Executive Attitude Towards Corporate Risk-Taking

The monitoring role of nonexecutive directors in Vietnam from a return-volatility perspective

A Study of Corporate Governance Structure, Disclosure and Information Asymmetry in Indonesia Banking Industry

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