Corporate Governance and Downside Systematic Risk with a Moderating Role of Socio-Political in Pakistan

Hussain, Shahzad; Shah, Syed Muhammad Amir

doi:10.22547/ber/9.4.11

Cited by 13 publications

(14 citation statements)

References 57 publications

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“…According to this result, H2 is accepted, which supports the agency theory viewpoint. Previous studies such as Wang et al (2015), Hussain and Amir Shah (2017) and Akbar et al (2017) also showed negative and significant impact of board independence on the downside risk and total risk exposure of the firms. The coefficients of director's ownership are also reported in Tables 4-6, which are negative and statistically significant at 1%, 5% or 10% in all the study samples.…”

Section: Dynamic Panel Generalized Methods Of Moment Resultsmentioning

confidence: 72%

“…Contrary to the agency theory, the stewardship theory proposes that managers are good stewards of firm's resources, and dual position provides an opportunity to the managers to work with complete authority and responsibility, which ultimately affects the firm performance and reduces the organizational risk (Donaldson and Davis, 1994). Previous studies such as Akbar et al (2017) and Hussain and Amir Shah (2017) found that CEO duality reduces the organizational risk. CEO duality in the asset management firms can also reduce the mutual fund risk, as it reduces the firm's risk.…”

Section: Theoretical Foundation and Hypotheses Developmentmentioning

confidence: 99%

“…Previous studies focused on the organizational risk, while little work is done on the risk exposure of mutual funds. Wang et al (2015) and Hussain and Amir Shah (2017) analyzed the impact of corporate governance characteristics on the downside risk exposure of Taiwanese firms and found that managerial ownership, board independence and overall governance quality reduce the probability of downside risk. Mathew et al (2018) investigated the impact of board structure, board compensation and overall governance quality on the risk-taking behavior of the UK firms and found that the quality of corporate governance reduces the probability of firm's risk.…”

Section: Literature Reviewmentioning

confidence: 99%

“…First, it analyzes the impact of corporate governance on the risk of Islamic mutual funds. Previous studies such as Wang et al (2015), Hussain and Amir Shah (2017), Jiraporn et al (2015) and Mathew et al (2018) have analyzed the role of corporate governance in mitigating the total and downside risk of the organizations; however, these studies primarily considered the organizational risk and ignored the risk exposure of mutual funds. Rodriguez (2015), Vidal-García and Vidal (2014) and Hayat and Kraeussl (2011) analyzed the total and downside risk exposure of mutual funds, but they did not focus on investigating the impact of corporate governance characteristics on mutual fund risk.…”

Section: Introductionmentioning

confidence: 99%

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Corporate governance mechanism and the risk exposure of Islamic mutual funds: evidence from Islamic countries

Naveed

Abdin

2020

JIABR

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Purpose This study aims to analyze the impact of corporate governance characteristics on the risk exposure of Islamic mutual funds prevailing in different Islamic countries (Pakistan and Malaysia). Design/methodology/approach This study used dynamic panel regression model for analysis and estimated the results using system generalized method of moment technique. A sample of 185 Islamic funds is used in the current research, which is selected using judgmental sampling. The data span of this study consists nine years from 2009 to 2017. Findings The results showed that the corporate governance characteristics such as board independence, directors and institutional ownership and overall governance quality are helpful in reducing the total and downside risk exposure of Islamic mutual funds. The findings also suggest that board size and Chief Extractive officer duality play no role in mitigating the risk of Islamic funds prevailing in both countries. Practical implications This study has implication for industry practitioners and fund managers. This study showed that the corporate governance characteristics are helpful in reducing the risk exposure of Islamic mutual funds. Therefore, this study provides input to the investment firms to improve the quality of corporate governance for lowering the risk exposure of mutual funds. Originality value To the best of the authors’ knowledge, this study is the first attempt to analyze the impact of corporate governance characteristics on the risk exposure of Islamic mutual funds and hence provides significant contribution in the literature of mutual funds.

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Section: Dynamic Panel Generalized Methods Of Moment Resultsmentioning

confidence: 72%

Section: Theoretical Foundation and Hypotheses Developmentmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Corporate governance mechanism and the risk exposure of Islamic mutual funds: evidence from Islamic countries

Naveed

Abdin

2020

JIABR

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“…board size, independent directors and CEO duality) changes their predicted theoretical behavior on firm performance mechanism. Thirdly, the results of the current study can also be generalized to the developing economies of this region which are suffering due to poor corporate governance mechanism (Hussain and Amir Shah, 2018). Lastly, majority of the previous studies in the Pakistani context (Abbas et al , 2018; Afza et al , 2015; Kamran and Shah, 2014; Rafique et al , 2017) used panel data estimation techniques (i.e.…”

Section: Introductionmentioning

confidence: 90%

Board characteristics, ownership concentration and firms’ performance

Waheed

Malik

2019

SAJBS

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Purpose The purpose of this paper is to extend the understanding and application of interactive ties creating value through board characteristics, ownership concentration and firms’ performance by using a contingent theoretical-based framework based on the amalgamation of resource dependence theory, stakeholder theory, agency theory, stewardship theory and institutional theory in a country with weak political environment. Design/methodology/approach This study includes a sample of an unbalanced panel of 309 non-financial sector firms listed on Pakistan Stock Exchange (PSX) from 2005 to 2016. In order to address the issue of unobserved heterogeneity, simultaneous and dynamic endogeneity, the current study employed the technique Arellano–Bond dynamic panel data estimation under assumptions of GMM (Arellano–Bond, 1991). Findings The empirical results suggest that the presence of concentrated ownership moderates and helps to overcome the agency problems through different governance mechanisms (such as board size, independent directors and CEO duality). The larger boards are found to be beneficial whereas the higher representation of independent directors in the board is found to be detrimental for Pakistani firms. Research limitations/implications Limitations of the study are, first the current study has analyzed public-listed firms from the non-financial sector, and second the study has only focused on the financial aspect of the performance. The future research could include other proxies of corporate governance and ownership structure such as board diversity and meetings, audit committee and managerial ownership, etc. Practical implications The research also helps Pakistani policy makers in numerous ways. First, the current study confirms the monitoring and expropriation effect of ownership concentration in corporate governance and performance mechanism. Thus, the Security and Exchange Commission of Pakistan (SECP) should make such policies which protect the corporate board against the influence of concentrated ownership so that the interests of the minority shareholders are protected. Second, SECP should ensure that all the listed firms declare a comprehensive profile of their directors (such as academic qualification, age and experience) in their annual reports for the better understanding of the governance−performance mechanism. Originality/value The current study augments the emerging body of literature on corporate governance and firm performance mechanism through the amalgamation and testing of existing theories in an emerging economy like Pakistan by using wider and newer data set.

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The downside risk of mutual funds: Does the quality of corporate governance matter? Empirical evidence from Pakistan

2021

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Corporate Governance and Downside Systematic Risk with a Moderating Role of Socio-Political in Pakistan

Abstract: Abstract

Cited by 13 publications

References 57 publications

Corporate governance mechanism and the risk exposure of Islamic mutual funds: evidence from Islamic countries

Corporate governance mechanism and the risk exposure of Islamic mutual funds: evidence from Islamic countries

Board characteristics, ownership concentration and firms’ performance

The downside risk of mutual funds: Does the quality of corporate governance matter? Empirical evidence from Pakistan

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