Board Structure and the Volatility of Volatility

Merz, Alexander; Trabert, Sebastian

doi:10.2139/ssrn.3717455

Cited by 2 publications

(2 citation statements)

References 69 publications

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“…High profitability served as a warning to investors regarding the firm's stability (Mishra & Modi, 2013). As profitable operations were typically linked to firm profitability, ROA was found to reduce risk (Merz & Trabert, 2020) and could serve as a moderating variable. Hence, our hypothesis was:H16 Return on assets moderates the relationship between ESG disclosure and firm risk.…”

Section: Theoretical Foundation and Hypothesis Formulationmentioning

confidence: 99%

Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review

Singhania,

Gupta

2024

Corp Soc Responsibility Env

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While the relationship between ESG disclosures and firm risk has been researched substantially, the results remain inconclusive, and contradictory, as of 2023. Through meta‐analysis, we investigate the effect of ESG disclosures measured by studies using E, S, G, or ESG disclosure on firm risk measured as total, systematic, or idiosyncratic risk with a sample of 76 papers published between 1991 and 2023. To the best of our knowledge, this is the pioneering attempt to investigate the impact of ESG disclosure on firm risk by adopting a meta‐analytical procedure to assess the significance of estimated mean effect size followed by meta‐regression analysis to test the effect of potential moderators. E, S, and G disclosures were found to be inversely related to firm risk as proposed by stakeholder and legitimacy theories. Further, the relationship between ESG disclosures and firm risk was found to be more pronounced for idiosyncratic risk rather than systematic risk. Results confirmed that firm size and female participation significantly moderated the relation between ESG disclosures and the level of firm risk. However, R&D, financial flexibility, disclosure index, and ROA had an insignificant but negative impact on the relationship. Our findings provide solace to managers and policymakers who may increasingly invest in ESG activities without worrying as ESG investing results in reducing firm risk. In addition, to manage risk, portfolio managers may include more stocks of environmentally as well as socially responsible firms in their portfolios. Future studies may suggest new moderators in the field of ESG disclosures and firm risk, thereby broadening the theoretical realm. Subsequent studies should examine the influence of specific environmental concerns such as carbon emissions, as well as social concerns such as gender equality and employee compensation, on stock returns. It contributes to the prevailing debate on ESG disclosures and firm risk nexus as well as attempts to shed light on pertinence of moderators affecting the relationship.

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Section: Theoretical Foundation and Hypothesis Formulationmentioning

confidence: 99%

Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review

Singhania,

Gupta

2024

Corp Soc Responsibility Env

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“…Fenomena volatilitas idiosinkratik telah menarik perhatian para peneliti dan berbagai penelitian dilakukan untuk mengidentifikasi faktor-faktor yang mendorong terjadinya fluktuasi harga saham yang berlebihan. Merz dan Trabert (2017) menemukan adanya hubungan antara ukuran Dewan Komisaris dengan volatilitas idiosinkratik. Studi yang menghubungkan frekuensi rapat Dewan Komisaris dengan volatilitas idiosinkratik telah dilakukan Ghafoor et al (2019).…”

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Pengaruh Umur CEO, Struktur Dewan Komisaris, Frekuensi Rapat Komite Audit, Konsentrasi Kepemilikan, dan Tenur Audit terhadap Volatilitas Idiosinkratik

Kumalasari¹,

Butar

2021

Pusat Pengkajian dan Pengembangan Akuntansi

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Idiosyncratic volatility is a series of sharp increase or decreas in stock prices due to a company's fundamental. This study argues that transparent financial reports should reduce idiosyncratic volatility. Transparent financial reports are the function of CEO age, board of commissioner size, board of commissioner meetings frequency, Audit Committee meetings frequency, ownership concentration, and audit tenure. Therefore, this study examines the effect of these variables on idiosyncratic volatility. Samples were gathered from Indonesian public firms for the periode of 2014-2018. Using regression analysis for the test of hypothesis, results show that while board of commissioner meetings frequency and audit tenure have negative effects on idiosyncratic volatility, the size of the board of commissioners, concentration of ownership have positive effects on idiosyncratic volatility. On the contrary, CEO age and audit committee meetings frequency have no effects on idiosyncratic volatility.

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Board Structure and the Volatility of Volatility

Cited by 2 publications

References 69 publications

Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review

Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review

Pengaruh Umur CEO, Struktur Dewan Komisaris, Frekuensi Rapat Komite Audit, Konsentrasi Kepemilikan, dan Tenur Audit terhadap Volatilitas Idiosinkratik

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