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Does corporate governance and earning quality mitigate idiosyncratic risk? Evidence from an emerging economy
Rahman, Habib Ur Ali, Asif Arian, Adam Sands, John
Rahman, Habib Ur
Ali, Asif
Arian, Adam
Sands, John
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
idiosyncratic risk, accrual quality, earnings quality, corporate governance, board quality index
Date
2024
Type
Journal article
Journal
Journal of Risk and Financial Management
Book
Volume
17
Issue
8
Page Range
Article Number
Article 362
ACU Department
Peter Faber Business School
Faculty of Law and Business
Faculty of Law and Business
Collections
Relation URI
Source URL
Event URL
Open Access Status
Published as ‘gold’ (paid) open access
License
CC BY 4.0
File Access
Open