Does Corporate Governance and Earning Quality Mitigate Idiosyncratic Risk? Evidence from an Emerging Economy
Article
Rahman, Habib Ur, Ali, Asif, Arian, Adam and Sands, John. 2024. "Does Corporate Governance and Earning Quality Mitigate Idiosyncratic Risk? Evidence from an Emerging Economy." Journal of Risk and Financial Management. 17 (8). https://doi.org/10.3390/jrfm17080362
Article Title | Does Corporate Governance and Earning Quality Mitigate Idiosyncratic Risk? Evidence from an Emerging Economy |
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ERA Journal ID | 213440 |
Article Category | Article |
Authors | Rahman, Habib Ur, Ali, Asif, Arian, Adam and Sands, John |
Journal Title | Journal of Risk and Financial Management |
Journal Citation | 17 (8) |
Article Number | 362 |
Number of Pages | 15 |
Year | 2024 |
Publisher | MDPI AG |
Place of Publication | Switzerland |
ISSN | 1911-8066 |
1911-8074 | |
Digital Object Identifier (DOI) | https://doi.org/10.3390/jrfm17080362 |
Web Address (URL) | https://www.mdpi.com/1911-8074/17/8/362 |
Abstract | This study investigates evolving corporate governance mechanisms within the context of an emerging economy. Addressing a literature gap, this study analyses the influence of corporate governance and earnings quality on idiosyncratic risk in an emerging economy. In particular, this research explores the impact of corporate governance practices and earnings quality on idiosyncratic risk. For this purpose, this research utilises a sample of 75 non-financial firms listed on the Pakistani equity market over nine years from 2010 to 2018. Employing the generalised method of moments, the findings of our empirical analysis reveal that firms with robust governance mechanisms and higher earnings quality experience minimal idiosyncratic risk. These outcomes provide valuable insights for standard setters, regulatory authorities, policymakers, and other stakeholders, emphasising the importance of governance mechanisms and earnings management in mitigating idiosyncratic return volatility. |
Keywords | accrual quality; idiosyncratic risk; earnings quality; corporate governance; board quality index |
Contains Sensitive Content | Does not contain sensitive content |
ANZSRC Field of Research 2020 | 350701. Corporate governance |
Byline Affiliations | Holmes Institute |
Xidian University, China | |
Australian Catholic University | |
School of Business |
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https://research.usq.edu.au/item/z9q19/does-corporate-governance-and-earning-quality-mitigate-idiosyncratic-risk-evidence-from-an-emerging-economy
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