The influence of corporate governance on financial derivatives decisions
This study investigates corporate governance risk behavior around the financial crises period and its sensitivity to varying levels of financial constraints. The study employs simultaneous-equations methodology to examine firms’ capital structure and derivatives usage decisions simultaneously. The s...
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2022
|
| Online Access: | http://journalarticle.ukm.my/21355/1/The%20Influence%20of%20Corporate%20Governance%20on%20Financial%20Derivatives%20Decisions.pdf |
| _version_ | 1796933417837789184 |
|---|---|
| author | Tashfeen, Rubeena Mahmood, Tashfeen Mustafa, Faisal Khursheed, Ambreen |
| author_facet | Tashfeen, Rubeena Mahmood, Tashfeen Mustafa, Faisal Khursheed, Ambreen |
| author_sort | Tashfeen, Rubeena |
| collection | UKM |
| description | This study investigates corporate governance risk behavior around the financial crises period and its sensitivity to varying levels of financial constraints. The study employs simultaneous-equations methodology to examine firms’ capital structure and derivatives usage decisions simultaneously. The sample is split into high and low levels of financial risk to examine impacts of corporate governance on decisions regarding usage of derivatives under both conditions. Further, quantile analysis is preformed to investigate governance responses at different levels of risk. We observe that corporate governance responses vary with the levels of distress. At lower levels, insider shareholders, Chief Executive Officer (CEO) salary, and CEO age influence financial derivatives decisions. However, institutional shareholders, audit committee meetings, CEO bonus and other compensation consistently impact derivatives decisions, irrespective of the level of financial distress. The study suggests that governance mechanisms vary with financial distress levels. Firms could optimally structure their governance mechanisms accordingly. The study shows it is important to incorporate levels of risk in any corporate governance study. |
| first_indexed | 2024-03-06T04:46:52Z |
| format | Article |
| id | ukm.eprints-21355 |
| institution | Universiti Kebangsaan Malaysia |
| language | English |
| last_indexed | 2024-03-06T04:46:52Z |
| publishDate | 2022 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| record_format | dspace |
| spelling | ukm.eprints-213552023-03-17T08:12:21Z http://journalarticle.ukm.my/21355/ The influence of corporate governance on financial derivatives decisions Tashfeen, Rubeena Mahmood, Tashfeen Mustafa, Faisal Khursheed, Ambreen This study investigates corporate governance risk behavior around the financial crises period and its sensitivity to varying levels of financial constraints. The study employs simultaneous-equations methodology to examine firms’ capital structure and derivatives usage decisions simultaneously. The sample is split into high and low levels of financial risk to examine impacts of corporate governance on decisions regarding usage of derivatives under both conditions. Further, quantile analysis is preformed to investigate governance responses at different levels of risk. We observe that corporate governance responses vary with the levels of distress. At lower levels, insider shareholders, Chief Executive Officer (CEO) salary, and CEO age influence financial derivatives decisions. However, institutional shareholders, audit committee meetings, CEO bonus and other compensation consistently impact derivatives decisions, irrespective of the level of financial distress. The study suggests that governance mechanisms vary with financial distress levels. Firms could optimally structure their governance mechanisms accordingly. The study shows it is important to incorporate levels of risk in any corporate governance study. Penerbit Universiti Kebangsaan Malaysia 2022 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/21355/1/The%20Influence%20of%20Corporate%20Governance%20on%20Financial%20Derivatives%20Decisions.pdf Tashfeen, Rubeena and Mahmood, Tashfeen and Mustafa, Faisal and Khursheed, Ambreen (2022) The influence of corporate governance on financial derivatives decisions. Jurnal Ekonomi Malaysia, 56 (2). pp. 29-46. ISSN 0127-1962 https://ejournals.ukm.my/jem/ |
| spellingShingle | Tashfeen, Rubeena Mahmood, Tashfeen Mustafa, Faisal Khursheed, Ambreen The influence of corporate governance on financial derivatives decisions |
| title | The influence of corporate governance on financial derivatives decisions |
| title_full | The influence of corporate governance on financial derivatives decisions |
| title_fullStr | The influence of corporate governance on financial derivatives decisions |
| title_full_unstemmed | The influence of corporate governance on financial derivatives decisions |
| title_short | The influence of corporate governance on financial derivatives decisions |
| title_sort | influence of corporate governance on financial derivatives decisions |
| url | http://journalarticle.ukm.my/21355/1/The%20Influence%20of%20Corporate%20Governance%20on%20Financial%20Derivatives%20Decisions.pdf |
| work_keys_str_mv | AT tashfeenrubeena theinfluenceofcorporategovernanceonfinancialderivativesdecisions AT mahmoodtashfeen theinfluenceofcorporategovernanceonfinancialderivativesdecisions AT mustafafaisal theinfluenceofcorporategovernanceonfinancialderivativesdecisions AT khursheedambreen theinfluenceofcorporategovernanceonfinancialderivativesdecisions AT tashfeenrubeena influenceofcorporategovernanceonfinancialderivativesdecisions AT mahmoodtashfeen influenceofcorporategovernanceonfinancialderivativesdecisions AT mustafafaisal influenceofcorporategovernanceonfinancialderivativesdecisions AT khursheedambreen influenceofcorporategovernanceonfinancialderivativesdecisions |