Reducing risk in the emerging markets: Does enhancing corporate governance work?


SAYARI MARCUM N. , Marcum B.

BRQ-BUSINESS RESEARCH QUARTERLY, vol.21, no.2, pp.124-139, 2018 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 21 Issue: 2
  • Publication Date: 2018
  • Doi Number: 10.1016/j.brq.2018.01.002
  • Title of Journal : BRQ-BUSINESS RESEARCH QUARTERLY
  • Page Numbers: pp.124-139
  • Keywords: Corporate governance, Risk, Emerging markets, American Depository Receipts (ADRs), Securities and Exchange Cornmiss (SEC) regulations, SARBANES-OXLEY ACT, AUDIT COMMITTEE, SOCIAL-RESPONSIBILITY, INVESTOR PROTECTION, BOARD COMPOSITION, FIRM PERFORMANCE, CROSS-LISTINGS, CEO DUALITY, IMPACT, OWNERSHIP

Abstract

This study examines emerging market firms that adopt corporate governance standards similar to those in the US. The investigation highlights the impact governance standards may have on corporate risk taking, as measured by stock return volatility, under varying political and socioeconomic regimes. In a cross-sectional time-series setting, the analysis reveals that enhanced governance standards are associated with risk reductions among US domiciled firms, cross-listed American Depository Receipt companies (ADRs) and non-cross listed emerging market (EM) firms. The effect of these governance standards on risk taking, however, does not deviate considerably between cross-listed ADRs that are exposed to Securities and Exchange Commission (SEC) mandated regulations and non-cross-listed EM firms that are not subject to the same regulatory constraints. Also, in some respects, Chinese firms seem to exhibit corporate behavior that is contrary to that of the rest of the world. (C) 2018 Published by Elsevier Espana, S.L.U. on behalf of ACEDE.