Stock price volatility and overreaction in a political crisis: The effects of corporate governance and performance

Huang, Hsu-Huei; Chan, Min-Lee; Huang, I-Hsiang; Chang, Cheng-Yuan

doi:10.1016/j.pacfin.2010.08.001

Cited by 42 publications

(51 citation statements)

References 49 publications

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“…The bird in hand theory (Gordon, 1959;Lintner, 1956), a theory that claims the influence of stock return toward corporate value, states that dividend policy will increase corporate value due to uncertainty in cash flow company in the future making dividend more interested for investor than capital gains. Some previous studies have discussed the effect of stock return on corporate value, for example Huang et al (2011), who found out that investors should seriously assess corporate governance when making investment decisions because not only did it have a positive effect on good governance, but also was able to stabilize stock prices during the crisis. The general conclusion from this theory and previous studies is that stock return has a significant influence on corporate value.…”

Section: Moderating Effect Of Stock Return Toward Financial Performancementioning

confidence: 99%

Stock return and financial performance as moderation variable in influence of good corporate governance towards corporate value

Suhadak

Kurniaty

Handayani

et al. 2019

AJAR

105

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Purpose -The purpose of this paper is to evaluate how much influence good corporate governance (GCG) has on corporate value, as well as moderating effect of stock return and financial performance on the influence of GCG on corporate value. Design/methodology/approach -This study was an explanatory study. The unit of analysis was the companies listed in LQ45 in Indonesian Stock Exchange and the sources of data were ICMD, annual report and financial reports of the companies. Indonesian Stock Exchange was selected as the setting of the study since Indonesian Stock Exchange is one of trading places for various types of companies in Indonesia, and it provides complete information on company's financial data and stock price. The population was 84 companies listed in LQ45 in Indonesian Stock Exchange between 2010 and 2016. Findings -The higher GCG, independent commissioners proportion, institutional managerial and public ownerships resulted in higher corporate value. MBE and PER stock return is a moderating variable in the influence of GCG on corporate value. Financial performance is moderating variable in the influence of GCG on corporate value. Originality/value -Based on the previous studies, it may be concluded that there is a gap between the influence of GCG on corporate value and the influence of stock return on financial performance, and moderating variable is needed to evaluate the influence of GCG on company performance, more particularly stock return and financial performance. This discrepancy creates opportunity for conducting an in-depth study on those variables. Its novelty is correlation between stock return and financial performance as moderation. Previous studies used these as mediating variables. This study is going to generate different finding as it is conducted in different setting (country where this study is conducted), type of industry, research period and using different method of analysis.

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Section: Moderating Effect Of Stock Return Toward Financial Performancementioning

confidence: 99%

Stock return and financial performance as moderation variable in influence of good corporate governance towards corporate value

Suhadak

Kurniaty

Handayani

et al. 2019

AJAR

105

View full text Add to dashboard Cite

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“…Similarly, Frye et al (2006) showed that CSR¯rms are more risk averse than non-CSR¯rms, resulting in a weaker link between CEO pay and¯rm performance in CSR¯rms than in non-CSR¯rms. Finally, other contributions highlighted that¯rms with better corporate governance tend to experience smaller stock price volatility (Huang et al, 2011). Therefore, if a lower risk pro¯le is generally associated with both greater CSR performance and a better governance system, the inclusion of sustainability targets in remuneration contracts should represent a mitigation tool of excessive risk-taking.…”

Section: Sustainability Targets In Remuneration Contracts and The Banmentioning

confidence: 99%

Sustainable Compensation and Performance: An Empirical Analysis of European Banks

Iannuzzi

Labini

Sica

2019

J. Fin. Mngt. Mar. Inst.

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This study investigates the financial and non-financial impacts of the use of sustainability criteria in banks’ executive compensation plans. The sample covers all the globally and systemically important European banks over the period 2013–2017. Panel data-fixed effect estimations are employed to mitigate endogeneity concerns and to control for within-firm dynamics. The implementation of sustainable criteria in the banks’ remuneration contracts was found to (i) negatively impact economic performance, (ii) negatively impact the riskiness profile, and (iii) positively impact sustainability performance. These findings have important implications for investors as well as banks. Indeed, these results are encouraging for the use of sustainability targets in executive compensation for restricting excessive risk-taking behaviors and improving sustainability performance.

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“…Kouwenberg et al (2014) offered an interesting finding that portfolios with bad corporate governance produce high returns as measured by using realized returns compared to portfolios with good corporate governance. Other research conducted by Huang et al (2011) stated that corporate governance has a positive effect on stock prices and can reduce the volatility of stock prices during a crisis. It becomes one of the considerations for investors in making investment decisions.…”

Section: Introductionmentioning

confidence: 96%

Good Corporate Governance on Stock Prices of Companies Listed in the KOMPAS 100 Index 2014-2018

Christian

Juanda

Bandono

2020

Int. res. j. bus. stud.

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This research aimed to analyze the effect of good corporate governance on stock prices. It was conducted on companies listed on the Indonesia Stock Exchange which were included in the KOMPAS100 Index in 2014-2018 by using a purposive sampling technique. Data analysis used was a panel data regression method with a fixed-effect model - least square dummy variable. The results of the study show that the number of board of the commissioner meetings, return on assets, earnings per share, and price to book value had significant effects on stock prices in a positive direction; the number of directors, education/training for corporate secretaries, and price to earnings ratio had positive but insignificant effects; the number of independent commissioners and the number of board of the director meetings had negative but insignificant effects on share prices. The novelty in this study was the addition of the variable of company secretary as an indicator of corporate governance, which was not found in previous studies. Besides, this study added a dummy interaction to see the effect of the level of corporate compliance on corporate governance.

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Stock price volatility and overreaction in a political crisis: The effects of corporate governance and performance

Cited by 42 publications

References 49 publications

Stock return and financial performance as moderation variable in influence of good corporate governance towards corporate value

Stock return and financial performance as moderation variable in influence of good corporate governance towards corporate value

Sustainable Compensation and Performance: An Empirical Analysis of European Banks

Good Corporate Governance on Stock Prices of Companies Listed in the KOMPAS 100 Index 2014-2018

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